HMRC has confirmed a 14p advisory fuel rate for drivers with small unleaded petrol cars, effective from June 1. The updated advisory rates have now come into force.
Who Does the 14p Rate Apply To?
Under the new HMRC rules, cars with engine sizes up to 1400cc qualify for the 14p per mile rate. These rates are specifically for employees using company cars and should be used when reimbursing business travel or when employees need to repay the cost of fuel used for private journeys.
HMRC warns that these rates must not be used in any other circumstances.
Guidance from the Government
The Labour Party government website explains: "If the mileage rate you pay is no higher than the advisory fuel rates for the engine size and fuel type of the company car, there will be no taxable profit and no Class 1A National Insurance to pay."
It adds: "If your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates, you can use your own rates to reflect your situation."
"If you pay rates that are higher than the advisory rates but cannot show that the fuel cost per mile is higher, there will be no fuel benefit charge if the mileage payments are only for business travel. Instead, you’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes."
Private Travel Repayments
There will be no fuel benefit charge if you correctly record all private travel mileage and use the correct rate (or higher) to work out how much your employees must repay you for fuel used for private travel.
HMRC also states: "You will not need to use the advisory rates where you can show that employees cover the full cost of private fuel by repaying at a lower mileage rate."
