HM Revenue and Customs (HMRC) has reduced its mileage rates for some cars in a series of changes to its new Advisory Fuel Rates (AFRs) due to falling fuel prices in the last quarter.
Pump prices have fallen back in recent weeks due to falling prices on the world markets, although July saw increases across the board as the pound lost 3% of its value against the dollar.
Motoring organisation the RAC said that, although the average price of petrol and diesel on the UK’s forecourts fell slightly in August, retailers failed to pass the entire discount in the wholesale prices to drivers.
A litre of petrol reduced 0.27p to 128.88p but the wholesale price came down by 4.38p to 96.57p.
RAC fuel spokesman Simon Williams said: “With nearly 4.5p coming off the wholesale price of petrol, drivers should have seen, at the very least, 2p a litre off at the pumps by the end of the month.
“While the average price charged by the supermarkets came down a little more than the UK average, they should really have led the way with larger cuts which would have spurred other retailers to reduce their prices too.”
Each litre of diesel decreased by 0.38p to 131.66p while its wholesale price fell by 1p a litre to 101.12p.
This meant the cost of filling a 55-litre car came down by 15p to £70.88 for petrol drivers and 21p to £72.41 for diesel cars.
The average price of fuel at the country’s four biggest fuel retailers – Asda, Tesco, Sainsbury’s and Morrisons – was 125.41p for unleaded petrol, a fall of 0.55p, and 128.04p for diesel, a 0.6p saving on July. Both fuels are around 3.5p cheaper at supermarkets than other UK fuel stations.
In response to the falling pump prices, HMRC has reduced some of its fuel rates from September 1, valid for the next three months.
The rates are relevant as they are used by organisations to reimburse company car drivers for fuel used in incurring business, rather than private mileage. Companies can use the old rates for up to one month from the date the new rates apply.
Under the new AFR rates there are a number of changes. The diesel rate for a company car with an engine 1,400cc or less stays the same as does the rate for a diesel car with an engine over 2,000cc.
However, the AFR for a diesel car, with an engine size from 1,601cc to 2,000cc, decreases by 1p per mile (ppm), from 12-11ppm.
The AFR for a petrol company car with an engine of 1,400cc or less stays the same at 12ppm, but both those with an engine from 1,400-2,000cc and over 2,000cc fall by 1ppm to 14ppm and 21ppm, respectively.
Meanwhile, LPG vehicles with an engine of 1,400cc or less will stay the same at 8ppm, but for LPG vehicles with an engine from 1,401-2,000cc, the rate increases from 9ppm to 10ppm. LPG vehicles with an engine above 2,000cc will stay the same at 14ppm.
The advisory electricity rate (AER) for plug-in cars, first introduced in September 2018, remains unchanged at 4ppm.
The company car mileage reimbursement rates are based on current petrol and diesel prices from the Department for Energy and Climate Change, with the LPG taken from the UK average price from the AA website in the previous month.
The new rates are as follows, although employers can use the previous rates for up to one month from the date the new rates apply.
|Engine size||Petrol – amount per mile||LPG – amount per mile|
|1400cc or less||12 pence||8 pence|
|1401cc to 2000cc||14 pence||10 pence|
|Over 2000cc||21 pence||14 pence|
|Engine size||Diesel – amount per mile|
|1600cc or less||10 pence|
|1601cc to 2000cc||11 pence|
|Over 2000cc||14 pence|
Hybrid cars are treated as either petrol or diesel cars for this purpose.