Ensure you use the correct company car business mileage rates

BUSINESS owners in Peterborough should check they are using the correct business mileage rates for company car drivers.

The rates, which are known as Advisory Fuel Rates (AFRs), now commence every quarter – since June 1, 2011 – having originally changed every six months unless fuel prices rose or dropped by more than 5 per cent.

The latest quarter commenced on 1 September 2011 – although the only change from the previous quarter is in the LPG rates.

If businesses use the correct AFRs, their company car drivers won’t be liable for any free fuel tax liability; and businesses themselves won’t have any National Insurance liability.

If your company pays for all fuel, company car drivers can repay the business mileage element using the AFRs – and again avoid any tax liability.

The new rates – with different payment amounts for petrol company cars and diesel-engined company cars – are as follows:

Advisory Fuel Rates from 01 September 2011 for petrol and LPG cars (including hybrids)

Engine size
1400cc or less:
15p (petrol); 11p (LPG)
1401cc to 2000cc:
18p (petrol); 12p (LPG)
Over 2000cc:
26p (petrol); 18p (LPG)

Advisory Fuel Rates from 01 September 2011 for diesel cars

Engine size
1600cc or less:
1601cc to 2000cc:
Over 2000cc:

These rates only apply if you have a company car. If you use your own private car for business, the rates you should be using are the AMAP (Approved Mileage Allowance Payments). These are 45p per mile for the first 10,000 miles in a tax year; and 25p per mile thereafter.

Whichever category you fall into, though, make sure you record your business mileage properly – approximations won’t do for the taxman.

Author Ralph Morton is editor and publisher of Business Car Manager magazine (www.businesscarmanager.co.uk). He was named Business Writer of the Year in the Guild of Motoring Writers Awards 2009.