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New Advisory Fuel Rates and VAT

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3 February 2017

HMRC have announced the advisory fuel rates for this quarter. The current rates can be found at http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm and the corresponding VAT element of the figures (plus the historic rates) can be found by clicking here.

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 advisory fuel rates are provided by HMRC as guideline fuel only mileage rates for company cars. They can be used to negotiate dispensations for mileage payments for business travel in company cars and are intended to reflect actual average fuel costs. The VAT element of the rates can also be used as a basis for reclaiming input tax on employee mileage claims, but only if the employee produces VAT receipts which in total include at least as much VAT as the amount of input tax being reclaimed. The rates only apply where employers:

  • reimburse employees for business travel in company cars 
  • or reimburse employees to repay the cost of fuel used for private travel 

If you want to find out more about advisory fuel rates and the VAT implications please call either Julian Millinchamp or Andy Connolly on 01242 237661 or email them at julian.millinchamp@hazlewoods.co.uk or andy.connolly@hazlewoods.co.uk


Julian Millinchamp - Indirect Tax Director
Julian Millinchamp
Indirect Tax Director Contact details