Fleet News

ACFO success in changes for June fuel rates

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.”

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  • GrumpyOldMen - 24/05/2011 14:15

    OMG HMRC exhibiting common sense. Am I on the right planet? Well done ACFO.

  • adamrollins - 26/05/2011 17:33

    The new AFR rates are now published on the HMRC site. The new lower band for diesel, sub 1600cc sees a decrease in AFR to 12p, while all other bands have been increased. Drivers are usually best served by working with actual pence per mile, using mileage and journey management. This also encourages better driving practices as the mpg the driver achieves is relcted in what they pay for private mileage. Adam Rollins, www.midas-fms.com.

  • sage&onion - 08/06/2011 14:20

    I agree with Adam Rollins. We use the AFR rates to reclaim private mileage fuel back from our drivers and our drivers are going to be much worse off than before now (15% worse off). Well done to HMRC for actually listening and agreeing to change to industry pleas but I think that ACFO overlooked the effect on drivers who pay for private fuel using the AFR rates. And most importantly, by reducing the average MPG (especialyy in the 1.6-2.0 litre diesel category) HMRC have missed an opportunity to encourage drivers to achieve better "actual" MPG performances and keep the UK carbon footprint as low as possible - as well as preserving valuable and expensive resources. This sends out a bit of a conflicting message in terms of what is actually achievable to maximise MPG performance. I think we may now change to an "actual cost" basis.

  • sage&onion - 10/06/2011 15:11

    Also....an opportunity missed to link the AFR's (and probably AMR's whilst they were at it) to co2 rather than engine size. Why didn't they change the engine bands to co2 of below 120g, 121g to 160g, and over 160g rather than the outdated engine size bands? This would have been just as simple to implement and would have kept them in step with their carbon reduction commitments. I'm surprised some of the car manufacturers didn'y lobby ACFO on this because some still produce diesel engines over 2,000cc which have lower co2 than some below 2,000cc.

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