From 1 September, petrol company car drivers face revised advisory fuel rates, with the highest charge rising to 27p per mile for vehicles with engines over 2,000cc. The rate for smaller engines remains unchanged.
New rates by engine size
HM Revenue and Customs (HMRC) updates its advisory fuel rates quarterly, and the latest figures took effect on 1 September. Petrol cars with engines under 1,400cc stay at 14p per mile, while those with engines between 1,401cc and 2,000cc remain at 17p per mile. However, engines of 2,000cc and above have increased from 26p to 27p per mile.
The rates have risen considerably since 2022, when a 2,000cc car cost just 15p per mile. HMRC reviews the charges every three months, adjusting them in line with current petrol, diesel and EV charging costs.
How advisory fuel rates work
Advisory fuel rates are used either by employers to reimburse staff for business travel in company cars, or by employees who need to repay the cost of fuel used for private journeys. HMRC states that these rates only apply to employees using a company car.
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."
Tax implications for drivers
Seat adds: "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 advises using the rates when reimbursing employees for business travel in their company cars or when employees need to repay the cost of fuel used for private travel, and says they must not be used in any other circumstances.
