Petrol and diesel drivers using a company car face new HM Revenue and Customs (HMRC) mileage charges from Tuesday, September 1. The tax office will set new advisory fuel rates from the start of September, with the updated charges due to remain in force for a three month period until December 1.
Quarterly Rate Reviews
HMRC updates its advisory fuel rates four times per year, with the quarterly changes taking place on fixed dates throughout the year. The rates only apply to drivers who use a company car and are used to reimburse employees for business travel in a company car, or when employees need to repay the cost of fuel used for private travel.
HMRC conducts a review of these rates every quarter at the beginning of March, June, September and December, with the charges due to change from Tuesday for the next three months.
Current Rates Before the Update
Currently, for drivers of petrol company cars with an engine size between 1401cc to 2000cc, or a diesel car with an engine size between 1601cc to 2000cc, advisory fuel rates are 17p per mile. For drivers of smaller cars, which include petrol vehicles with an engine size of 1400cc or less, the charges are 14p per mile, and for drivers of diesel cars with an engine size of 1600cc or less the charges are 15p per mile.
Advisory fuel rates are higher for larger cars, with 26p per mile charges currently in force for petrol vehicles with engines over 2000cc and 23p per mile charges for diesel vehicles with engines over 2000cc.
How Rates Are Calculated
To set the new rates from September 1, HMRC takes the latest petrol and diesel prices from the Department for Energy Security and Net Zero (DESNZ). HMRC said the 'rates per mile' are rounded to one decimal place, but the final advisory fuel rates are rounded to the nearest whole penny. Rates per mile which end in 0.5 are rounded down to the nearest whole penny for the advisory fuel rate when the underlying unrounded figure ends in a number less than 0.5. When the underlying unrounded figure ends in a number greater than 0.5, it is rounded up to the nearest whole penny.
The reimbursement rates for petrol and diesel company cars increased from June to reflect rising global oil and pump prices following the outbreak of war in the Middle East. Average petrol prices reached their highest level in three and a half years between March and June, with the wholesale cost of petrol in May surging to more than 5p above the previous high of the Iran oil crisis.
Full List of Current Rates
Advisory fuel rates also increased for petrol, diesel and liquified petroleum gas (LPG) from June to reflect hikes in fuel prices since the Iran war began, but rates for electric vehicles remained unchanged, regardless of whether drivers use home or public chargers for their company car. Listed are the current advisory fuel rates in full for petrol, diesel, LPG and electric cars before the change on Tuesday, September 1:
Petrol cars
Engines up to 1400cc or less: 14p per mile (up from 12p)
Engines between 1401cc to 2000cc: 17p per mile (up from 14p)
Engines over 2000cc: 26p per mile (up from 22p)
Diesel cars
Engines up to 1600cc or less: 15p per mile (up from 12p)
Engines between 1601cc to 2000cc: 17p per mile (up from 13p)
Engines over 2000cc: 23p per mile (up from 18p)
LPG (Liquefied Petroleum Gas) cars
Engines up to 1400cc or less: 11p per mile (up from 10p)
Engines between 1401cc to 2000cc: 13p per mile (up from 12p)
Engines over 2000cc: 21p per mile (up from 19p)
Electric cars
Home charger: 7p per mile (unchanged)
Public charger: 15p per mile (unchanged)
