1 March 2025 – Fuel Only Mileage Rates for Company Cars/Reclaim of VAT on Private Car Mileage
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.
Many 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 reviewed and adjusted each quarter 1 March/1 June/1 September/1 December.
The rates from 1 March 2025 are:
| Engine Size | Petrol | Diesel | LPG |
|---|---|---|---|
| 1400cc or less | 12p | 12p | 11p |
| 1401cc to 1600cc | 15p | 12p | 13p |
| 1601cc to 2000cc | 15p | 13p | 13p |
| Over 2000cc | 23p | 17p | 21p |
Hybrid cars are treated as petrol (or diesel) as appropriate.
The rate for business mileage in fully electric company cars is 7p 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.
This page on the HMRC website always shows current and earlier rates – https://www.gov.uk/government/publications/advisory-fuel-rates
