Tag Archive | "AFR"

More Grief For Company Car Users


It used to be the case that company cars were allocated to employees whose work justified it. It thus became a prized ‘perk of the job’ and those that qualified were looked on with envy by those whose time was yet to come. Or maybe never would.

Gradually though, the company car system evolved until such time as it became an employee benefit available to staff a little further up the ladder and was also used to attract the best candidates. Improvements in the quality of car offered at lower grades and prices led to improved offerings at each higher grade of earnings, often justified by the argument that extra acceleration, comfort and many and varied options equated to improved safety. The company car had become a status symbol; a sort of badge of success. A new car on the family drive.

The downside, inevitably, was that it attracted the attention of the taxman who – not to put it too delicately – wanted his slice of the automotive action. The end result has been the development of a complex system of ‘benefit-in-kind’ regulations. Just to put the tin lid on it, as of right now, the rules are going to change again and drivers of mid-range vehicles are not going to like it.

Her Majesty’s Revenue and Customs department has flexed a fevered finger over the calculator and decided that the business mileage Advisory Fuel Rates (AFR), from 1st June 2013, drop by one penny per mile and this will remain in place at least until the end of August. Bear in mind that ‘mid-range’ vehicles in effect means most of the company cars issued.

For petrol engines between 1401cc and 2 litres the rate drops from 18p to 17p per mile. For diesels it’s 14p from 15p and for smaller diesels below 1.6L it’s a meagre 12p. For the smallest and the largest engines the rate remains unchanged. And don’t think you can get away with a fuel card either. Using a card to buy all the fuel will mean that the AFR’s will be used to deduct private mileage. There is no escape.

Petrol hybrids count for the petrol rate and diesel hybrids for the diesel rate. It is all covered. It’s a tragedy that electric cars simply don’t have the range for most business use. With the various leasing and buying options available these days the value of the company car is debated. Some say leasing is best, others the opposite. It is a situation best looked at closely and in some depth, especially with the taxman looking over your shoulder.

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