New advisory fuel rates from 1 December 2010
Tuesday, December 7th, 2010
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HMRC reviews the published advisory fuel rates every six months and the new rates, effective from 1 December 2010, are added to the Table below. Employers may choose to:
- implement the new rates immediately or use the old rates for up to one further month, and
- require employees to make supplementary payments if the new rates cannot be applied immediately, although there is no obligation to do so.
HMRC documents the way in which the rates are calculated. They are based on average fuel consumption for the different engine sizes, reduced by 10% to make the figures more realistic. The fuel prices used are
- petrol – 119.0p per litre (540.9p per gallon)
- diesel – 122.7p per litre (558.0p per gallon)
- LPG – 66.4 p per litre (301.9p per gallon).
By way of a reminder, the advisory fuel rates are provided by HMRC for employers to apply where they:
- reimburse employees for business travel in their company cars, or
- require employees to repay the cost of fuel used for private travel in company cars.
A question posted on the PayPerShop forum since the new rates were announced asked why the mileage rates for “1400cc petrol cars” and “up to 2000cc diesel cars” have increased when the fuel prices have not increased. The answer is that there are two variables in the calculation, the miles per gallon and the price per gallon. Most of the mpg figures show a decrease in the latest Table, giving higher mileage rates for some cars.
Further information:
Company cars – advisory fuel rates from 1 June 2010 http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm
New advisory fuel rates http://www.paypershop.com/phpBB2/viewtopic.php?f=60&t=1705
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