Drivers of petrol and diesel company cars will face revised HM Revenue and Customs (HMRC) mileage rates from Tuesday, 1 September. The tax authority will introduce updated advisory fuel rates at the beginning of September, with the new charges remaining in effect for a three-month period through to December 1.
HMRC revises its advisory fuel rates on four occasions annually, with the quarterly adjustments occurring on set dates throughout the year. The rates are applicable exclusively to company car drivers and are utilised to reimburse employees for business travel in a company vehicle, or when employees are required to repay the cost of fuel used for private journeys.
Quarterly Review and Current Rates
HMRC carries out a quarterly review of these rates at the start of March, June, September and December, with the charges set to be revised from Tuesday for the following three months. Currently, petrol company car drivers with an engine size between 1401cc and 2000cc, or diesel car drivers with an engine size between 1601cc and 2000cc, are subject to advisory fuel rates of 17p per mile.
For those driving smaller vehicles, including petrol cars with an engine size of 1400cc or below, the rate stands at 14p per mile, while drivers of diesel cars with an engine size of 1600cc or less are charged 15p per mile. Advisory fuel rates are considerably higher for larger vehicles, with charges of 26p per mile currently applicable to petrol cars with engines exceeding 2000cc, and 23p per mile for diesel vehicles with engines above 2000cc.
How Rates Are Calculated
To establish the revised rates from 1 September, HMRC draws upon the most recent petrol and diesel prices provided by the Department for Energy Security and Net Zero (DESNZ). HMRC confirmed that 'rates per mile' are rounded to one decimal place, while the final advisory fuel rates are rounded to the nearest whole penny.
Rates per mile ending in 0.5 are rounded down to the nearest whole penny for the advisory fuel rate when the underlying unrounded figure concludes in a number below 0.5. Where the underlying unrounded figure ends in a number exceeding 0.5, it is rounded up to the nearest whole penny.
Recent Price Increases and Full Rate List
Reimbursement rates for petrol and diesel company cars rose from June to account for climbing global oil and pump prices following the onset of conflict in the Middle East. Average petrol prices reached their highest point 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 recorded during the Iran oil crisis.
Advisory fuel rates also climbed for petrol, diesel and liquefied petroleum gas (LPG) from June to reflect fuel price increases since the Iran war commenced, though rates for electric vehicles remained unchanged, irrespective of whether drivers charge their company car at home or via public charging points.
Below are the current advisory fuel rates in full for petrol, diesel, LPG and electric vehicles prior to 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)
