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New advisory fuel rates are issued
HM Revenue & Customs (HMRC) has published new advisory fuel rates, which apply to all relevant journeys made on or after 1 June 2011.
However, for one month from the date of change, employers may choose to use the previous rates or the new current rates.
The rates are usually revised biannually, although HMRC has confirmed that it will now review the rates at the beginning of each calendar quarter – on 1 March, 1 June, 1 September and 1 December.
In view of this, it will no longer consider making changes if fuel prices fluctuate by 5% from the published rates.
As widely anticipated, there is now a new band for diesel cars which caters for vehicles with engines up to and including 1,600cc.
The advisory fuel rates are accepted either for employers reimbursing employees for the cost of fuel for business mileage, or for employees reimbursing employers for the cost of fuel for private mileage.
Employers are not obliged to reimburse their employees at the advisory rates, as long as any alternative rates can be justified, for example using a higher rate per mile where an employee uses a four-wheel drive vehicle in the performances of his or her duties.
The new rates can be viewed on the HMRC website.