Changes to the advisory fuel rates from 1 January 2009

To reflect the reduction in fuel prices, HMRC have issued new advisory fuel rates for employees driving employer provided cars. These take effect for all journeys undertaken from 1 January 2009, so employers using the advisory rates should advise affected employees and update any expense forms as soon as possible. The advisory fuel rates should be used for journeys undertaken on or after 1 January 2009.

Engine size	Petrol	Diesel	LPG
1400cc or less	10p (12p)	11p (13p)	7p (7p)
1401cc – 2000cc	12p (15p)	11p (13p)	9p (9p)
Over 2000cc	17p (21p)	14p (17p)	12p (13p)

HMRC are supposed to give employers a month’s notice of changes to these rates. However, according to the HMRC guidance: ‘As was done for the July 2008 changes, HMRC is content for the new rates to be implemented immediately where employers are able and wish to do so.’ Other points to be aware of about the 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 employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.

If you would like to discuss your car policy, please contact us. Source: HMRC advisory fuel rates