TT140: Company Car Fuel Update
Mileage rates from July:
In TT129 we reported on the new rates to be used for paying the fuel-only element to employees who claim for business miles driven in company cars. (Remember, this applies only when the employee with a company car pays for all their fuel and claims back only the business element). The rates stated in that issue of Topical Tips should be used from 1 January 2009. However, from 1 July 2009 the rates have been altered as shown below.
Advisory Fuel Rates
|1,400cc or less||10p||10p||7p|
|1,401cc to 2,000cc||12p||10p||8p|
You should update your systems to match the new rates or you might inadvertently pay employees the wrong amount and create a tax and National Insurance bill for the company.
HMRC will consider changing the rates if fuel prices fluctuate by 5 per cent from the published rates when each review is made and where they consider the price change will be sustained.
Employers can check this at: http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm
The next potential review of these figures will be from 1 January 2010.
Barnes Roffe Topical Tips
- Please refer to TT127 and consider reviewing all staff’s company car benefit to see if the fuel benefit is worth it – often scrapping it could benefit both you and your employees!
- Ensure you update the above rates to avoid underpaying staff the highest potential tax-free amount for their business mileage, or to avoid overpaying staff and creating an unexpected tax and National Insurance bill for the company.
- If in doubt then please speak to your Barnes Roffe LLP partner for guidance.