TaxCorporate TaxEmployers’ ‘relief’ at new fuel tax rates

Employers' 'relief' at new fuel tax rates

HMRC updates tax rates for fuel expenses

The taxman is updating fuel expenses rates to reflect the rise in the price
of fuel.

The increase in the Advisory Fuel Reimbursement (AFR) rate should ease the
pressure on employers who have faced tough decisions justifying the rate at
which they reimburse employees for their fuel costs.

However KPMG has questioned HMRC’s decision to only revise the rate twice a
year.

‘HMRC’s policy is to update the rates twice yearly – although they say that
they will review if rates move by more than 5% in the interim. Despite
significant increases in fuel prices, employers will argue that HMRC were slow
to make any changes this time,’ said Harvey Perkins, director in KPMG people
services.

‘Logic might suggest that the system needs to be more flexible to the needs
of business in the UK – after all its stated function is to ensure that
employees are allowed to be reimbursed fairly for the true cost of the business
fuel they actually use.’

‘The recent fuel price increases which justify these AFR changes have
happened very rapidly. In these unusual circumstances we are mindful that an
implementation date of 1 July might mean that drivers will be incurring higher
fuel prices before the new rates become effective. Consequently, where employers
are able to do so, HMRC is content for the new rates to be implemented
immediately i.e. from 1 June,’ according to
HMRC’s
website
.

Further reading:

Green company cars could save UK
firms £3bn a year

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