TT129: Company Car Fuel

January 22, 2009

In TT127 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 only claims back the business element). The rates stated in that issue of Topical Tips could be backdated to 1 June 2008. However, from 1 January 2009 the rates have been reduced as shown below.

Advisory Fuel Rates:

Engine size Petrol Diesel LPG
1,400cc or less 10p 11p 7p
1,401cc to 2,000cc 12p 11p 9p
Over 2,000cc 17p 14p 12p

You should update your systems to match the new rates or you might inadvertently overpay employees and create a tax and national insurance bill for the company.

Future Changes:

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: HMRC

The next potential review of these figures will be from 1 July 2009.

Barnes Roffe Topical Tips:

Please refer to TT127 and consider reviewing all staffs 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.

Talk to Barnes Roffe today
Share this page:
Contact Us
ICAEW The Chartered Institute of Taxation ACCA IPG IR