Fleet operator representatives have been notified of significant changes to offical fuel reimbusement rates due to come into force on June 1.
HMRC has alerted ACFO to the new rules which will include a quarterly review of Advisory Fuel Rates (AFR), as well as a more generous interpretation of average fuel consumption.
The move reflects greater efforts by car manufacturers to optimise vehicles for improved fuel consumption in official tests, which are then more difficult to replicate in real-world conditions on the road.
There will also be an extra rate for diesel, with the lowest band set for engine capacity up to and including 1,600cc, an intermediate band for 1,601cc-2,000cc, and a top band for engines of 2,001cc and greater.
However, with more frequent review, HMRC will no longer implement interim changes if fuel prices vary significantly.
In its message to ACFO, HMRC says: "We will review AFRs on a quarterly basis, starting from 1st June 2011, but as a result of this increased frequency, we will withdraw our commitment to make interim changes if fuel prices vary by 5% or more.
"We will reduce the average miles per gallon for petrol and diesel by 15% rather than 10% in alignment with the approach used by the Energy Saving Trust – this is to reflect the fact that figure on fuel efficiency produced by car manufacturers are based on optimum driving conditions and that we need to factor in a reduction for real life driving conditions.
"We will introduce an extra band for diesel cars, now that more manufacturers are producing cars with smaller diesel engines. The first band will now be set up to and including 1600cc, the second band will be 1601-2000cc and the third band will be 2001cc and above. We will continue reviewing this, and if the range of smaller engines increases, we will look eventually to set the lowest band up to and including 1400cc, so that the three bands for petrol, diesel and LPG are the same.
"We will continue to give employers a month’s grace to implement the changes. "
ACFO chairman Julie Jenner welcomed the changes. She told Fleet News: "This follows years of lobbying HMRC for some change and it’s a great outcome.
"Since 2006 we’ve been calling for the quarterly review and the alignment of the manufacturers' published mpg figures to that used by EST and at our last meeting in January we raised the possibility of splitting the diesel bands."
ACFO director Stewart Whyte added: “We are delighted that HM Revenue & Customs has accepted our arguments over Advisory Fuel Rates.
“Our major concern recently has focused on the volatility of fuel prices, which we have witnessed not only in recent months but several times since we started discussing the Advisory Fuel Rates mechanism with officials. However the changes in process highlighted above all meet the suggestions originally made by ACFO and will make the whole process much more robust.
“We are sure that the more frequent review of Advisory Fuel Rates will be welcomed by ACFO members. Overall, while we have yet to learn exactly what the new rates will be, we believe the new mechanism for making the calculation is robust, fair to all sides and easy to implement.”