New advisory fuel rates March 2020

New advisory fuel rates published by HMRC

New advisory fuel rates March 2020

The latest advisory fuel rates (AFR) have been published by HM Revenue and Customs.

The changes for petrol, diesel and LPG cars will come into force on 1 March 2020 and apply to employees using a company car.

There’s no change for diesel cars with an engine size of 1,600cc or less, with the reimbursement rate remaining at 9p per mile. Similarly, the rate for 1,601cc to 2,000cc diesel engines stays at 11p per mile.

However, the AFR for diesel engines over 2,000cc is dropping from 14p to 13p. Similarly, the rate for petrol engines over 2,000cc is decreasing from 21p to 20p.

Petrol engines of 1,400cc or less stay at 12p, while the rate for 1,401cc to 2,000c petrol cars remains at 14p.

Hybrid cars are treated as either petrol or diesel cars for this purpose. Meanwhile, the rate for fully electric cars is 4p per mile – electricity is not a fuel for car benefit purposes.

The AFR for LPG cars with a 1,401cc to 2,000cc engine is increasing by a penny to 10p per mile. A summary of the new rates can be found in the table below.

HMRC calculates the AFR using current fuel prices. The details can be found here, but in summary, the current price of petrol is 123.8p per litre. Diesel is 128.2p, while LPG is listed at 68.5 per litre.

Fuel economy on LPG cars is assumed to be 20 percent lower than petrol due to lower volumetric energy density.

New advisory fuel rates for company cars

Advisory fuel rates from 1 March 2020

Engine sizePetrol (per mile)LPG (per mile)Diesel (per mile)
1,400cc or less12p8p
1,401cc to 2,000cc14p10p
1,600cc or less9p
1,601cc to 2,000cc11p
Over 2,000cc20p14p13p

What are advisory fuel rates?

Companies use the advisory fuel rates when reimbursing employees for business travel in their company cars or when they require employees to repay the cost of fuel used for private travel.

If a company pays for the expenses at a rate no higher than the AFR for the car in question, they are not required to pay Class 1A National Insurance. It is accepted that there is no taxable profit gained.

However, a company can use its own rate where a lower rate is required. An example could be if a company car is proven to be more fuel efficient than the AFR suggests.

The government reviews the advisory fuel rates on a quarterly basis, so the next update will be on 1 June 2020.

Clamping down: UK’s tax evasion hotspots revealed

Car clamp

The DVLA has named 11 areas of the UK where tax dodging is highest as it launches a new ‘tax it or lose it’ advertising campaign.

A whopping 27,605 vehicles were clamped in London in 2018, with a further 94,550 motorists receiving a fine or penalty. This makes London the country’s tax evasion capital, with the number of enforcement actions almost more than the total of the next two locations combined.

Of the other locations, more vehicles were clamped in Manchester than anywhere else in the country, while Northern Ireland topped the list of fines and penalties.

‘Never been easier to tax your car’

Untaxed vehicle warning

The advertising campaign will feature a giant clamp to ram home the message that the DVLA will take action on untaxed vehicles. Potential punishments include financial penalties, court action, clamping and the loss of a car.

DVLA’s head of enforcement Tim Burton said: “This campaign has a clear message for anyone who flouts the law in this way – tax it or lose it.

“It’s never been easier to tax your car, so there really is no excuse. We would rather not have to clamp or remove vehicles, but this campaign highlights the consequences of not taxing a vehicle.

“Having your vehicle clamped is expensive and inconvenient – and you could end up losing your car.”

The UK’s tax dodging hotspots

AreaClampedFines or penaltiesTotals
Northern Ireland5,51667,94473,460
torsos found in untaxed vehicle

Torsos, toilets and sofas: the things motorists leave in their untaxed cars

torsos found in untaxed vehicle

‘Tax it or lose it,’ is the DVLA’s message to drivers of untaxed vehicles. But tax-dodgers could lose more than just their wheels.

Last year, the DVLA removed nearly 600 items of personal belongings from untaxed vehicles, including some rather odd appurtenances. We’re not talking about sunglasses, phone chargers and gym shoes, here.

Somebody out there is living with half a corner sofa, because the other half was found in an untaxed car. Time to find out when DFS is going to have another sale?

Meanwhile, somebody is missing their Beavis & Butthead trading cars, a jockey has lost three helmets, and someone is learning to live without a quantity of men’s torso mannequins. What goes on behind closed doors, etc.

Other items include a quad bike, an acoustic guitar, a toilet, fishing rods, full drum kit, a set of golf clubs and a Louis Wain book of illustrated cats from the 1920s.

We’re not experts in the field of Louis Wain illustrations, but a cursory glance at the listings of a well-known auction site would suggest that the book could be worth more than the annual Vehicle Excise Duty (VED) for a typical motor.

Any personal belongings found in impounded vehicles are catalogued and stored for a period of time in case they are claimed, before being made available for sale.

Clamping down on tax-dodgers

Tim Burton, head of enforcement at the DVLA, said: “Having your car clamped is expensive and inconvenient – and as this list of items shows, you could end up losing more than just the car!

“DVLA operates a range of measures to make vehicle tax easy to pay and hard to avoid. While the vast majority of motorists do the right thing and tax their cars correctly, it is right that we take action against those that break the law and fail to tax their car.

“It’s never been easier to tax your car – it’s just a few clicks to do it online and you can do it 24 hours a day. You can also spread payments across the year by Direct Debit, so there really is no excuse.”

Wheelclamping is one of a range of enforcement measured used by the DVLA. The motorist will have to pay a release fee of £100 and – if they’re unable to show that the vehicle has been taxed – a surety fee of £160.

This fee is refunded if the motorist is able to show that the vehicle has been taxed within 15 days of the vehicle’s release. If the release fee has not been paid within 24 hours, the vehicle is impounded and the cost rises to £200.

Then, the motorist will be charged a storage fee of £21 per day, along with a surety fee of £160. If in doubt, tax it or declare it off the road (SORN).

DVLA tax systems offline

Why you are UNABLE to tax a car this weekend

DVLA tax systems offline

The DVLA is warning motorists that they will be unable to tax their vehicle online, by phone or at a Post Office this weekend, as most of its services are taken offline.

Essential systems maintenance means new car buyers will be forced to wait before they can drive their car home – so you might want to plan ahead.

The services, including the contact centre, will be unavailable from 3pm on Friday 17 August until 6am Monday 20 August (8am for the contact centre). During this period, it will not be possible to tax a car.

As the DVLA points out: “It’s against the law to drive an untaxed vehicle on the road. If you buy a car during this weekend you won’t be able to tax it until 6am on Monday 20 August.”

Tax can no longer be transferred to the new owner

It is no longer possible to carry over any remaining months on the tax ‘disc’, and the seller is unable to transfer any ‘unused’ Vehicle Excise Duty (VED) to you. Put simply, any car purchased over the weekend will be untaxed.

If the VED doesn’t expire until the end of the month, you’ll be able to tax the car when services return to normal on Monday morning.

Not all services are affected. It will still be possible to view and share your driving licence details with third parties, including hire companies. You can also renew your 10-year photocard driving licence at the Post Office.

For more information, follow the DVLA on Twitter.

Car tax disc

The £100 million question: why is car tax evasion rocketing?

Car tax discThe government told us eliminating the paper tax disc would save the country £10 million a year: hurrah! What a pity latest stats from the Department for Transport reveal a potential revenue loss of £107 million per year caused by tax evasion. Drat!

That £107 million figure is easily the greatest amount lost to tax evasion in at least a decade.

The scale of the problem is enormous: in 2013, 0.6 percent of vehicles on British roads were observed to have evaded paying Vehicle Excise Duty (VED). That grew to 1.4 percent in 2015. In 2017, that figure’s grown further, to 1.8 percent. Which is equal to around 750,000 vehicles.

Even the DfT seems surprised by the increase: It observes “the number of vehicles evading is significantly higher in comparison to 2015”. Compared to 2013, it fails to add, it’s even more significantly higher.

A potential loss of £0.1 billion a year because of 750,000 people not paying their road tax is a serious issue in anyone’s book. Now, the DfT does add that it can’t say for sure whether £107 million is the actual loss, because some of that revenue may have been recovered through DVLA enforcement, or through guilty owners paying up later.

But it’s still not small change. And it’s still tripled since the paperless car tax system was introduced in October 2014. Question is, why are the rates rocketing? The paperless system is undoubtedly the cause, but what aspect of the system is causing so many tens of millions to be lost?

Paperless car tax evasion: the causes


Fifty-two percent of the unlicensed vehicles caught had been without road tax (VED) for less than two months. The next highest figure is two-to-four months, way back on less than 20 percent.

This indicates that the power of the visual reminder on a car windscreen was significant – probably much more so than DfT officials expected. Eventually, people will be alerted that they’re driving around in an untaxed car – perhaps at MOT or car insurance renewal time – but it seems the initial forgetfulness factor is high.

Reminder letters are sent out when VED tax is due, but it seems these aren’t enough to chivvy people into sorting their car tax promptly. Maybe they’re sent out too early, duly filed and themselves forgotten about…

Not understanding the change of owner rules

Under the new rules, car tax is not transferred to the new owner when a car is sold. The original owner instead receives a refund, meaning the car automatically becomes untaxed when the DVLA receives the paperwork.

Some motorists don’t realise this – 15 percent of the 750,000 vehicles caught were spotted after a licence refund had been issued, and no subsequent licence had been taken out. However, this pales compared to the 70 percent of cars simply driving around after the tax had expired – and the fact this 15 percent figure is almost half what it was in 2015 suggests motorists are becoming familiar with the new system. It’s not the root cause of why there are now so many untaxed cars on our roads.

Direct Debit foibles

Motorists can now pay for road tax via Direct Debit: 13 million were taken out in 2016/17. Could tech problems with the system be causing evasion rates to go up? It seems not: the DVLA says it “actively pursues” any lapsed payments – and the fact that so many millions of organised people are signing up to have their VED paid automatically should theoretically mean the evasion rate ought to stabilise or even go down, rather than skyrocket…

Budget-crunched motorists

Fifty-one percent of unlicensed cars caught were aged 10 years or more. In contrast, 24 percent of licenced vehicles were aged 10 years or more. Maybe older, cheaper cars are being driven by those with less disposable income? And maybe cash-stricken motorists are thus being unavoidably forced into taking a chance that they won’t be caught?

Car tax is not cheap: the cost for a vehicle built between 2001 and 2017, emitting 226g/km CO2 or more, is over £500. Given the real terms fall in wages, that’s an enormous sum for those just about managing.

Oh, and what about motorcycles?

If you think tax evasion is bad for cars, just look at bikes: 5.8 percent of motorcycles are reckoned to be evading VED. Admittedly, says the DfT, it’s harder to collect tax for bikes than it is for other vehicles, but it’s still a fair indication of a higher evasion rate for motorcycles.

Eleven percent of all unlicensed vehicles had been so for more than a year. Look to motorcycles, and that figures rockets to 38 percent…

In a sense, it’s perhaps inevitable: if the policing system for VED evasion partly relies on ANPR, the fact bikes have half the number of registration plates as cars means they are, in theory, half as likely to be caught by police cameras.

So what’s the answer?

The treasury will be keen to solve this dilemma, particularly as the amount lost due to licence evasion has gone up so dramatically. The answer, it seems, is simply a better reminder system.

Motoring Research has one idea that might work: a brightly-coloured piece of paper on the windscreen telling everyone who looked at it if the vehicle was licenced or not, instantly, at a glance. Even if the car’s owner forgot, their partner, or kids, or neighbours might spot it. It would be very obvious indeed if you’d evaded road tax – and who wants the embarrassment of displaying to the world that they’re a tax-dodger?

We estimate it could only cost £10 million a year to enact, a mere fraction of the amounts being lost to road tax evasion. It’s such a strong idea, we’ll certainly be sending it on to the DfT. We’ll let you know how we get on.

>NEXT: The smart motorways most likely to hit you with a ticket

changes to road tax 2017

New 2017 road tax rules: a five-minute guide

changes to road tax 2017

From 1 April 2017, Vehicle Excise Duty – commonly known as road tax – is set for some major changes. If you’re looking to buy a new car in 2017, you really need to know about these and how they might affect you.

First things first – if you own a car registered before 1 April 2017, the changes don’t affect you. But if you’re in the market for something new, you have until the end of March 2017 if you don’t want to be stung by the reforms.

And that’s because, while there’s good news for some, the majority of drivers could be left out of pocket. Read on to find out more.

Why is the system changing?

Cast your mind back to the budget of summer 2015, when the Chancellor of the Exchequer announced an overhaul of the current system. According to then Chancellor, George Osborne, the changes are required to fill a hole in the Treasury’s coffers.

In simple terms, you’re buying too many super-efficient petrol and diesel cars, and with a taxation system based on CO2 emissions, the government has been left out of pocket. Indeed, Osborne claimed that, under the current system, 75% of new cars would be eligible for free road tax by 2017.

Something had to give.

What are the changes to road tax?

The rate of Vehicle Excise Duty (VED) will still be split into 13 bands and calculated on a vehicle’s CO2 emissions. Only cars with 0g/km CO2 emissions will be eligible for free road tax. This is a big deal.

Since March 2001, new cars emitting less than 130g/km CO2 have been tax exempt in the first year, and subject to a sliding scale of taxation for each year thereafter. For example, buy a car in band B (101-110g/km) and you’ll pay nothing in the first year and just £20 from year two.

From April 2017, the cost will rise considerably. Not only will you pay £140 in the first year, you’ll also pay £140 in the second year and each year thereafter. So at the end of year three you’ll have spent £420 on tax – £380 more than if you bought the same car a month earlier.

The first-year rate of tax is based on a sliding scale, ranging from free road tax for electric and hybrid vehicles, to £2,000 for cars with CO2 emissions in excess of 255g/km. From the second year, all but the zero emissions cars move to flat rate of £140.

This is potentially good news for buyers of the least efficient cars on sale. Take the Bentley Flying Spur with a V12 engine. With CO2 emissions of 335g/km, under the current system you’ll pay £1,120 in the first year and then a hefty £515 from the second year.

Using the new system you’ll have to find £2,000 for the first year, but the second year rate drops to the standard £140. Keep the car for a few years and you’ll be quids in. But there is a catch…

From April, all vehicles with a list price of over £40,000 – including zero emission cars – will attract an additional rate of £310, payable each year for five years from the end of the first vehicle licence. At this point it drops to the standard rate.

Which means a Tesla Model S will cost £310 a year – a big shock for those who might be expecting free road tax.

Is it worth buying a car before April?

If you’re in the market for an efficient petrol, diesel or hybrid vehicle, it’s almost certainly worth registering it before the end of March. Indeed, industry experts are expecting one of the busiest months on record, as buyers also rush to grab a car with a new 17-plate.

Say, for example, you buy a new Suzuki Celerio with a 1.0-litre engine emitting 99g/km CO2. Register the car before the end of March and you’ll pay no road tax whatsoever. From April, you’ll pay £120 in year one and then £140 from year two. Three years on and you’re £400 out of pocket.

The case isn’t quite as clear cut when it comes to the least efficient vehicles, and much will depend on how long you intend to keep the car. There’s also the penalty for £40,000 cars to take into consideration.

Oh, and don’t think you’ll be able to escape the £310 fee by negotiating the price down below £40,000. The government will use the published list price. Go easy on the options, too, as these could push your car beyond the £40k mark.

Do the changes affect my current car?

Tax rates for vehicles registered on or before 31 March 2017 will not be affected by the changes.

VED bands and rates for cars first registered on or after 1 April 2017

CO2 emissions (g/km)First year rateStandard rate*
1 – 50£10£140
51 – 75£25£140
76 – 90£100£140
91 – 100£120£140
101 – 110£140£140
111 – 130£160£140
131 – 150£200£140
151 – 170£500£140
171 – 190£800£140
191 – 225£1200£140
226 – 255£1700£140
Over 255£2000£140

*Cars with a list price of over £40,000 when new pay an additional rate of £310 per year on top of the standard rate, for five years.

Dieselgate company car drivers

#Dieselgate: company cars set for a nasty shock?

Dieselgate company car drivers

Company car drivers could be in for a shock in the wake of the Volkswagen diesel emissions scandal. That’s according to London chartered accountants, Blick Rothenberg. Company car benefits are based on the list price and the approved CO2 emissions of the vehicle, with diesel-engined cars attracting a 3% supplement.

It stands to reason that if cars are retested following the scandal, company car tax could rise on a number of vehicles. It has been confirmed that Volkswagen, Audi and Skoda models fitted with the EA189 diesel engine are affected, all of which are popular within the fleet sector.

Higher taxable benefits for employees

Caroline Le Jeune, partner at Blick Rothenberg, said: “For UK-based employees with company cars, the taxable value of the benefit as shown on the employee’s P11d is likely to have been incorrect.

“Whilst there is no expectation of HMRC taking retrospective action in these highly peculiar circumstances, no official comment has been made.

“Going forward, company car benefits are likely to need to be recomputed using the updated CO2 emissions figures, which will lead to higher taxable benefits for employees.”

The government moved from the old mileage-based system in 2002, switching to the more complicated approach based on CO2 emissions and list price. In short, the more CO2 your car emits, the more tax you pay. A tax escalator ensures the bill can go up every year, so many company car drivers will be awaiting the conclusion of this scandal with interest.

It’s too early to speculate whether this will result in more drivers choosing to take the alternative cash allowance, or indeed weigh up their options when the list of available cars is next passed around the office. But there’s little doubt that the emissions scandal could have deep ramifications for the wider business community.

You can follow the latest #DIESELGATE developments here.