Fuel rates from 1 June 2010

Make sure you're not still using the old fuel rates

H M Revenue and Customs issued new advisory fuel rates for use from 1 June 2010.  Where employees are provided with a company car and they are reimbursed a mileage rate to cover the fuel used on business journeys, or employees are required to reimburse the employer for fuel used on private journeys then the advisory rates are normally used.  Records of the journeys and payments need to be maintained to ensure that tax bills don’t arise on the mileage reimbursed or fuel paid respectively.

These rates apply to all journeys on or after 1 June 2010 until further notice:

Engine Size                        Petrol     Diesel        LPG
1400cc or less                       12p           11p           8p
1401cc to 2000cc                  15p           11p         10p
Over 2000cc                          21p           16p         14p

Petrol hybrid cars are treated as petrol cars for this purpose.  The rates are not binding, and where actual costs can be demonstrated to be different these can be used instead by agreement with your local tax office.

Where mileage rates are paid for business journeys and adequate records are maintained, then it is possible for a VAT registered business to consider reclaiming VAT on the amounts paid.  The VAT that can be reclaimed can only be on the proportion of the mileage allowance that relates to fuel.  The employee will need to supply VAT petrol receipts in order to allow the business to reclaim the VAT.

Extract taken from our 2010 Summer edition Tax newsletter – if you would like to subscribe please leave your details here.

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