New Advisory Fuel Rates changes set for 1 June
Details of changes to the Advisory Fuel Rates system, set to come into force next month, have been revealed by HM Revenue & Customs.
In a note to the Association of Car Fleet Operators, HMRC said it will begin to review the AFR system on a quarterly basis, instead of twice a year. This will be at expense of interim changes like the instance in March this year when sharp fuel rises sparked the HMRC to act and raise rates by between 1-2p depending on engine size.
To correspond with the approach used by the Energy Saving Trust, HMRC will reduce the average miles per gallon for petrol and diesel by 15% rather than 10%.
An extra band for diesel cars will be introduced as a reaction to more manufacturers producing cars with smaller diesel engines. The bands will be set to 1600cc or less, 1601-2000cc and 2001cc and higher. HMRC intend to review this and could lower the first band to 1400cc or less.
The HMRC sound off stressing that it will continue to give employers a month’s grace to implement the changes meaning that until 1 July either the new or the current rates can be used.
ACFO Director Stewart Whyte said he was delighted with the changes, which will take effect from 1 June.
He commented: “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“However, the changes in process highlighted above all meet the suggestions originally made by ACFO and will make the whole process much more robust.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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