ACFO calls for Advisory Fuel Rates review to help struggling company car drivers
The Association of Car Fleet Operators (ACFO) Membership Secretariat Office has been inundated with calls from members concerned at the increasing divide between the HM Revenue & Customs (HMRC) schedule of Advisory Fuel Rates (AFRs) and current forecourt prices of petrol and diesel.
The current AFRs (see table below) were last revised in December 2009 when a litre of unleaded petrol cost 108.7p and a litre of diesel cost 109.9p. Today a litre of unleaded petrol has rocketed to an all-time high of 120.3p a litre on average with a litre of diesel costing an average 121.1p, according to comparison website www.petrolprices.com.
AFRs provide a range of rates based on engine size and fuel type and can be applied where employers reimburse employees for business travel in their company cars, or require employees to repay the cost of fuel used for private travel, tax-free. However, some company car drivers are currently reluctant to undertake business travel because of record high petrol prices meaning they are effectively subsidising their employer for every mile covered.
Currently HMRC reviews rates twice a year with any changes taking effect on June 1 and December 1. Despite a litre of petrol now being 11.6p (10.7%) more expensive than when AFRs were reviewed last year and a litre of diesel being 11.2p (10.2%) more expensive and HMRC’s stance that it would consider changing the rates if fuel prices fluctuate by 5%, ACFO has been told that HMRC has no plans to change rates ahead of the scheduled half-year review.
ACFO director and membership secretary Stewart Whyte said: “It is clear from the number of ACFO fleet decision-maker members calling our Office that there is widespread concern over the low level of AFRs in relation to the high price of fuel, particularly petrol as pump prices are now at levels not seen before in the UK.
“That concern is manifesting itself with some drivers reluctant to undertake business travel on the basis that they are effectively having to subsidise their employer for every mile covered, even driving economically.”
He continued: “On behalf of the membership we have taken the issue up with HMRC.
However, despite the ‘significant pressure’ on drivers’ costs due to the high prices of petrol and diesel, we have been told that there are no plans to make an interim change at this stage.
“But, on behalf of ACFO members we will continue to press for a more responsive position on fuel reimbursement systems. We recognise the benefits of infrequent rate changes from the administrative point of view, but this has to be balanced against fairness and good practice for employee treatment.”
Present AFRs
|
Engine size |
Petrol |
Diesel |
LPG |
|
1400cc or less |
11p |
11p |
7p |
|
1401cc to 2000cc |
14p |
11p |
8p |
|
Over 2000cc |
20p |
14p |
12p |
· Petrol hybrid cars are treated as petrol cars for this purpose.
See also:
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