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Changes to Fuel Rates from 1 July 2008

HMRC have recently published new mileage rates that company car users can use to calculate the fuel cost of running their vehicles for private purposes.  If this private element is repaid to employers the employees will avoid the penal car fuel benefit charge.  The new rates are:

 

Engine size:

• 1400cc or less: petrol 12p, diesel 13p, LPG 7p
• 1401cc to 2000cc: petrol 15p, diesel 13p, LPG 9p
• Over 2000cc: petrol 21p, diesel 17p, LPG 13p

Employers can also use these rates to calculate the VAT input tax on fuel included in staff mileage claims – employers will need to collect fuel receipts from staff to prove the fuel was purchased.  It is unlikely that staff will have receipts that exactly match the fuel element on their claim forms so the requirement is that receipts should cover the same time period and include sufficient VAT to cover the amount of VAT claimed.