CARS - 14.06.2011

New Advisory Fuel Rates

Reimbursement. The Advisory Fuel Rate (AFR) is mainly of use in two situations. Firstly, where an employee personally pays for fuel used in their company car or van and claims reimbursement from their employer for business mileage. Secondly, where the business pays for all fuel, e.g. via a company fuel card or account at a petrol station, and requires the employee to reimburse it for the cost of their non-business mileage.

No tax or NI for employee. Usingthe AFR means you don’t need to work out the actual cost of fuel per mile for each of your company vehicles. You can reimburse your employees safe in the knowledge that the Taxman will accept that the payment doesn’t trigger a benefit-in-kind charge(yr.10, iss.6, pg.4, seeThe next step).

Tip. If you think that the AFR is too low, e.g. because the car/van in question has a high fuel consumption, you can use a higher rate which can also be paid tax and NI-free. But you must keep records to justify how you arrived at this figure.

Rates. The table below shows the new rates that apply from June 1. The previous rates which applied from March 1 are shown in brackets.

For a previous article on the Taxman’s AFR, visit http://tax.indicator.co.uk (TX 11.18.08).