The company car fuel rates are reviewed and adjusted each quarter on:
- 1 March
- 1 June
- 1 September
- 1 December
When an employee is provided with a company car, to avoid a taxable car fuel benefit, fuel must only be provided for business travel.
To ensure this is the case, two methods are available, the first being preferable:
- The employee initially pays for all fuel. The employee logs their business miles and makes a claim to the company at the correct rate per mile for these miles.
- The company initially pays for all fuel. The employee logs their business & private miles and repays the company at the correct rate per mile for the private miles.
Several years ago HMRC started to issue ‘Advisory Fuel Rates’, which they allow for the above calculations without any proof of the actual fuel cost per mile.
The rates from 1 December2020 are:
|1400cc or less||10p||8p||7p|
|1400cc to 1600cc||11p||8p||8p|
|1601cc to 2000cc||11p||10p||8p|
Hybrid, Petrol or Diesel rates?
Hybrid cars are treated as petrol or diesel as appropriate.
The rate for business mileage in fully electric company cars is 4p per mile
Employers and employees need to revise their calculations accordingly. You are allowed to continue on the previous rates for one month.
Different rates can be used but these have to be specifically agreed with HMRC by providing documentation and calculations to show why the rate you wish to use is sensible.
These rates (for Petrol/Diesel/LPG) are also those used for reclaiming VAT on mileage allowances paid to employees for business mileage in their private cars.
The Advisory Fuel Rates page on the HMRC website always shows current and earlier rates.