Her Majesty’s Revenue and Customs (HMRC) has announced new advisory fuel rates (AFRs) three months early in light of rising pump prices.

The new rates, which companies use to repay drivers for fuel used on business mileage, take effect from tomorrow (Tuesday, March 1).

HMRC has increased the rates by 1p per mile for petrol and diesel cars with an engine size of 2,000cc or less, and for diesel cars with an engine size over 2,000cc. For petrol cars with an engine size over 2,000cc, the rate has increased by 2p.

LPG rates have also increased and petrol hybrid cars are treated as petrol cars for this purpose.

HMRC normally reviews AFRs every six months and the existing rates, which were effective from December 1, 2010, were not due to be updated until June 1.

It remains to see whether the increases announced this week will help meet the shortfall drivers have been experiencing and that ACFO highlighted at a recent meeting with HMRC.

For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.

The new rates are:
Engine size:        Petrol   Diesel    LPG
1400cc or less:       14p       13p    10p
1401cc to 2000cc:   16p       13p    12p
Over 2000cc:          23p       16p    17p
 

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