The decision by HM Revenue & Customs (HMRC) to raise the
levels of Advisory Fuel Rates (AFRs) for drivers of company cars
has been warmly welcomed by fleet association ACFO. The rates had
been widely anticipated, but ACFO said that HMRC’s announcement
that the rates would come into effect on June 1 rather than July 1,
in recognition of recent steep fuel price rises, was particularly
good news.
ACFO director Stewart Whyte said: “We welcome these changes in
Advisory Fuel Rates. We also appreciate that HMRC has acknowledged
the extreme financial pressure on many company car drivers who
believe that in recent months they have effectively been
subsidising their companies’ business mileage.”
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Whyte added: “Assuming that employers are able to apply the new
rates during June, one month earlier than expected, and are willing
to do so, the HMRC’s concession will go some considerable way
towards alleviating the financial hardship that drivers have been
feeling. There is still some encouragement in these new rates for
employees to drive as economically as possible, but at least the
element of subsidising employers has gone.”
AFRs are updated twice a year, on January 1 and July 1, and are
reviewed if prices fluctuate to a level 5 per cent greater than
that used to calculate the previous rate.
|
NEW ADVISORY FUEL RATES |
|||||||
|
Fuel Type 
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Engine Size |
MPG1 |
Applied |
Fuel price (per |
Fuel price (per |
Pence per mile |
AFR (previous rates in |
|
Petrol |
up to 1400 |
48.9 |
44.0 |
114.8 |
521.8 |
11.9 |
12 (11) |
|
Petrol |
1400-2000 |
39.5 |
35.6 |
114.8 |
521.8 |
14.7 |
15 (13) |
|
Petrol |
over 2000 |
27.8 |
25.0 |
114.8 |
521.8 |
20.9 |
21 (19) |
|
Diesel |
up to 2000 |
50.7 |
45.7 |
127.2 |
578.3 |
12.7 |
13 (11) |
|
Diesel |
Over 2000 |
38.2 |
34.4 |
127.2 |
578.3 |
16.8 |
17 (14) |
|
LPG |
up to 1400 |
39.1 |
35.2 |
57.1 |
259.6 |
7.4 |
7 (7) |
|
LPG |
1400-2000 |
31.6 |
28.5 |
57.1 |
259.6 |
9.1 |
9 (8) |
|
LPG |
1400-2000 |
22.2 |
20.0 |
57.1 |
259.6 |
13.0 |
13 (11) |
Notes:
1 Mean miles per gallon, weighted by annual sales to businesses
(Fleet Audits, 2006).
2 Adjusted to take account of real driving conditions and lower
fuel economy for older cars.
3 For LPG, assume mileage is 20 per cent lower due to lower
volumetric energy density.
4 Department for Business, Enterprise & Regulatory Reform ‘s
latest petrol and diesel prices (26th May 2008), and latest
available UK average LPG update (May 2008) from AA website.
Source: HMRC
Motor Finance Issue: 44 – June 08
Published for the web: June 25 08 16:58
Last Updated: June 25 08 17:18
