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Advisory Fuel Rates

As of 1st September 2016, there will be a change to Advisory Fuel Rates. These can be really confusing for business owners, fleet managers and company car drivers. Let us try and make it as simple as possible. See our table below for all the figures and engine bands and how these have been affected by the recent change. 

Engine Size

Diesel – amount per mile

 

1600cc or less

9p

No Change

1601cc to 2000cc

11p

Up 1p per mile

2001cc upwards

13p

 

Up 1p per mile

 

Petrol – amount per mile

 

1400cc or less

11p

 

Up 1p per mile

 1401cc to 2000cc

13p

No Change

2001cc upwards

20p

No Change

It is also worth noting that there is no change to LPG cars too.

When do these rates apply?

Often employees may use business fuel for private use, it’s really important that private miles are correctly recorded and you use the correct rate (or anything higher). Advisory rates can be used in one of two ways:

These rates apply when:

  • Reimbursing a member of staff for business travels in their company car
  • Requiring employee’s to pay back the fuel costs that have occurred from private travel. 

Why are the rates important?

If you pay your employee’s a higher rate than the one set out by HMRC then they may have to pay some tax over to HMRC as the employee would be making a taxable profit. It can all get really complicated and create excess work for your accountant if you pay more than the rate. If the rates are paid correctly then there will be no need to apply for a dispensation to cover the payments to employees either.

How can RAM Tracking help?

RAM is very useful when it comes to co-operating with HMRC over Advisory Fuel Rates. This is because the tracking allows you to cast an eye on employee’s private/business mileage. Installing RAM means that you will never be paying for an employee’s private mileage again. The majority of businesses see a reduction in fuel costs straight away as employees don’t even try to outsmart the software.

Earlier this year, it was reported that 56%* of company car drivers were unaware of HMRC’s rules when it comes to reclaiming business mileage which led to hundreds of business receiving large fines.  Don’t let your business become the next company to get stung. You can download our free guide on all things HMRC here - https://www.ramtracking.com/info-centre/useful-guides/hmrc-guide-stay-on-the-right-road-with-fuel-and-tax-benefits/

*Statistics provided by Fleetnews

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