Drivers are set to learn how much they will pay from September 1 in a matter of just weeks for those using company cars or driving a personal car for work.
HM Revenue and Customs (HMRC) updates its advisory fuel rates quarterly, and in just a few weeks they are set to be confirmed for the next quarter, beginning on September 1. HMRC reviews the charges every three months and adjusts them based on the current cost of petrol, diesel and EV charging.
Current pence per mile rates
The tax office set the current rate for cars with an engine over 2,000cc at 26 pence per mile. There are also two lower rates for smaller engines, including 14p per mile for cars with engines of 1400cc or below, and 17p per mile for cars with engines between 1401cc and 2000cc.
The rates have increased massively since 2022, when a 2000cc car would cost 15p per mile. It is expected to announce the new rate for the next quarter within the next few weeks.
How advisory fuel rates work
Spanish manufacturer Seat explains how they work:
"If you're reimbursing employees for business travel in their company cars at a set pence per mile rate, then you need to be aware of the latest advisory fuel rates.
"Set quarterly by the Government, advisory fuel rates are designed to reflect the typical cost of fuel when driving a company car.
"How much tax company car drivers will pay on fuel costs depends on the mileage rate your business uses when processing expense claims:
"At advisory fuel rates, your employees won't incur any tax liability;
"Below advisory fuel rates, they may be eligible for a tax rebate;
"Above advisory fuel rates, company car drivers may be liable for additional tax (unless they can explain why the cost is higher).
"Company car drivers can also reduce benefit-in-kind costs by paying back their private mileage."
HMRC guidance on the rates
HMRC says about the rates:
"These rates only apply to employees using a company car.
"Use the rates when you either:
- reimburse employees for business travel in their company cars
- need employees to repay the cost of fuel used for private travel
"You must not use these rates in any other circumstances."
