The rates, which are used to reimburse company car drivers for business mileage, are to be held at the same level as the last quarter despite rising fuel prices. In its latest fuel price update the AA reported a 2.5% increase in UK pump prices over the last month.

Speaking about the HMRC announcement, Paul Jackson, managing director of fuel and mileage management specialists TMC, said: ‘There is bound to be some reaction from drivers against the decision to hold the AFR rates just as fuel prices are once again hitting their wallets. Nevertheless, this is the result of consistent application of HMRC’s methodology.

‘Businesses should always bear in mind that the AFRs are only intended as a convenient guideline to the maximum amounts that drivers can claim for fuel, without supporting evidence from mileage loss and purchase receipts, without incurring liability for Benefit-in-Kind tax.’

He added: ‘In practice, many fleets require drivers to settle their fuel claims on an actual cost basis, as this eliminates any arguments over the fairness of mileage rates. There are further advantages to going down the actual cost route via an automated mileage capture process: better management information, less paperwork around expenses settlement and (as long as there are effective audit controls in place) records that are fully compliant with HMRC requirements.’

The current rates are:

Petrol:

1400cc or less            15p

1401cc to 2000cc            18p

Over 2000cc                        26p

Diesel:

1600cc or less            12p

1601cc to 2000cc            15p           

Over 2000cc                        18p

LPG:

1400cc or less            10p

1401cc to 2000cc            12p

Over 2000cc                        17p