Where an employer reimburses an employee for fuel only, the employer can choose to reimburse using the ‘advisory
rates’ issued by HMRC. If different rates are used, the employer would need to be able to justify this with some supporting evidence.
New advisory fuel rates have been issued by HMRC that took effect from 1 September 2012.
Engine size: Petrol; LPG
1400cc or less: 15p; 10p
1401cc to 2000cc: 18p; 12p
Over 2000cc: 26p; 17p
Engine size: Diesel
1600cc or less: 12p
1601cc to 2000cc: 15p
Over 2000cc: 18p
Employers please note that employees can only avoid the car fuel benefit charge if the amount they repay in respect of private fuel at least equals the amounts based on these and previous published fuel rates.
Petrol hybrid cars are treated as petrol cars for this purpose.
These rates can also be used to reclaim VAT input tax on the fuel element of car mileage payments although businesses will also need to retain fuel receipts.