New advisory fuel rates come into effect

The New Year sees the introduction of new advisory fuel rates for company cars.

The rates can be used to negotiate dispensations for mileage payments for business travel in company cars, and they apply to all journeys taking place in a company car on or after 1 January 2008.

To view the latest rates, visit www.hmrc.gov.uk/cars/advisory_fuel_current.htm.

The rates are intended to reflect average fuel costs, and apply only where employers reimburse employees for business travel in their company cars, or where employees are required to repay the cost of fuel used for private travel.

Following the January change, HMRC will review the advisory rates twice a year.

Future changes are planned to take effect on 1 January and 1 July, although HMRC will consider adjusting the rates at other times if fuel prices should fluctuate by 5% during each six month period.