New company car fuel rates

Advisory fuel rates

HMRC has published new ‘advisory fuel rates’ (AFR) for company cars, which apply to journeys from 1 June 2018, here.

Where an employer reimburses an employee for the cost of fuel that is used for business travel in a company car, the employee will enjoy an element of profit if the payment is too high. This is taxable as employment income. If the AFR (or a lower rate) is used, HMRC will accept that no tax charge arises, without requiring a detailed justification of the figures. An employer may use a different rate in particular circumstances (e.g. where the terrain or the driving pattern results in a higher than usual fuel consumption) but HMRC may require the calculation to be justified.
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