Businesses are being reminded that advisory fuel rates for company cars have changed.
Each quarter HM Revenue & Customs (HMRC) posts a list of advisory fuel rates (AFR) on its website, basing its calculations on the latest trends in prices at the pump. The AFR is then used by companies to claim back tax on business mileage for company cars or to reimburse private mileage to individuals using their own car for business use.
This quarter, HMRC has taken the decision to cut AFRs by 1p for diesel cars with engines larger than 2,000cc and petrol vehicles with engines over 2,000cc, along with those that have motors of 1,400cc and smaller. The new rate came in on 1 December and leaves the rate for other vehicles unchanged.
The cut is supposedly a response to the sharp decline in prices at the pump, which have seen average prices drop to 121.18p for petrol and 126.11p for diesel (based on government index for w/c 8 Dec). The falling prices have occurred as a result of a slump in the world’s crude oil prices that have been driven by a surge in US shale gas and higher than expected levels of production in the Middle East – causing crude oil prices to fall to $73 a barrel.
While most of this saving is yet to be passed on to the average motorist it has resulted in prices falling. This, along with a freeze on fuel duty announced in the Autumn Statement, means that the burden of fuel costs has been somewhat alleviated in recent months.