Changes to the Advisory Fuel Rates from 1 December 2009

HMRC have in the past given employers a month's notice of changes to these rates.  However, according to the HMRC guidance:

"After discussions with the relevant trade bodies, the month's notice previously given has been withdrawn for this change.  Employers are not obliged to reimburse their employees for busienss fuel at these rates as long as they do not exceed them overall.  Employers making or collecting payments at the superseded rate because they have not been able to change their systems in time may use their judgement on whether to make or require a secong payment in respect of the same period in order to apply the new rate from its effective date.  However, employers should note that under normal rules, employees are only able to avoid the car fueld benefit charge if the amount they repay in respect of private fuel at least equals the amounts based on the rates as published."

Other points to be aware of about he advisory fuel rates:
- Employers do not need a dispensation to use these rates.
- Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates.  Such claims should be based on the actual costs incurred.
- The advisory rates are not binding where an emplyer can demonstrate that a cost of business travel in employer provided cards is higher than the guideline mileage rates.  The higher cost would need to be agreed with HMRC under dispensation.

If you would like to discuss your car policy, please contact us.