Drivers will learn within weeks how much they will pay per mile from September, whether they use company cars or drive personal vehicles for work. HM Revenue and Customs (HMRC) updates its advisory fuel rates quarterly, and the figures for the next quarter, starting September 1, are due to be confirmed shortly.
Current rates and changes
HMRC reviews the charges every three months, adjusting them in line with current petrol, diesel, and EV charging costs. The tax authority has set the current rate for cars with engines over 2,000cc at 26p per mile. Two lower rates apply for smaller engines: 14p per mile for cars with engines of 1,400cc or below, and 17p per mile for those between 1,401cc and 2,000cc.
The rates have risen considerably since 2022, when a 2,000cc car was charged at just 15p per mile. The new rate for the forthcoming quarter is anticipated to be announced within the next few weeks.
How advisory fuel rates work
Spanish manufacturer Seat explains: "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 pay on fuel costs depends on the mileage rate your business uses when processing expense claims: at advisory fuel rates, 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.
What 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 or need employees to repay the cost of fuel used for private travel. You must not use these rates in any other circumstances.
