THE Government has bowed to pressure from the fleet industry and announced a major review of its Advisory Fuel Rates for company car drivers.

But tens of thousands of company car drivers in vehicles with engines smaller than 2.0-litre have been ignored in the changes, potentially leaving them out of pocket.

The rates, which are used when employers reimburse staff for business travel in their company cars or require employees to repay the cost of fuel used for private travel, remain the same for vehicles below 2.0-litres, but rise significantly for those of 2.0-litres and above.

A spokesman for HM Revenue and Customs said: ‘We aim to provide employers with as much certainty as possible by keeping the fuel rates unchanged where there are modest variations in fuel prices.

‘In line with the commitment made when they were introduced, they will be reviewed during a tax year only in the event of a variation in fuel prices of greater than 10% from the prices used at that time.’

Under the new regime rates for cars of 1,400cc or less can be reimbursed by 10p a mile for petrol, 9p for diesel and 7p for LPG. Cars of 1,410cc to 2,000cc also stay the same – 12p for petrol, 9p for diesel and 8p for LPG. For cars of 2.0-litres and above, the rate has increased by 2p for petrol, to 16p, and 1p for diesel, now 13p. LPG can be reimbursed at 10p per mile.

Stewart Whyte, a director of the Association of Car Fleet Operators (ACFO), said the revised rates go some way to answering concerns that fleet drivers were being left out of pocket by high fuel prices.

He said: ‘We welcome the publication of the methodology used to calculate these figures but we are surprised that the fuel rates haven’t risen for cars under 2.0-litres, given the amount of complaints we have received from fleet customers who don’t believe their drivers were being reimbursed fairly. We will also be keeping a careful eye on fuel prices as already diesel prices have increased since they were used to set the fuel rates.’

Whyte also urged HM Revenue & Customs to educate regional offices that the rates published are advisory and not statutory. He added: ‘We have heard of instances where tax office staff have told fleets that if they pay any more than the advised fuel rate then they will pay tax but that is not the case as the rates are clearly stated as advisory.’

Advisory fuel rates for company cars from July 1, 2005:

Engine Petrol Diesel LPG
1,400cc or less 10p 9p 7p
1,401cc to 2,000cc 12p 9p 8p
Over 2,000cc 16p 13p 10p

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