Advisory Fuel Rates

What are Advisory Fuel Rates and what are they used for?

Advisory Fuel Rates can only be used by employees using a company car. The rates can be used to reimburse employees for business travel in their company cars, or repay the cost of fuel used for private travel.

Advisory Fuel Rates – note for employers

If the mileage rate you pay is no higher than the advisory fuel rates for the engine size and fuel type of the company car, there will be no taxable profit and no Class 1A National Insurance to pay.

If your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates, you can use your own rates to reflect your situation.

If you pay rates that are higher than the advisory rates but cannot show that the fuel cost per mile is higher, there will be no fuel benefit charge if the mileage payments are only for business travel. Instead, you will have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.

Advisory Fuel Rates – note for employees

There will be no fuel benefit charge if you correctly record all private travel mileage and use the correct rate (or higher), to work out how much your employees must repay you for fuel used for private travel. If they do not reimburse you for private travel then a benefit in kind can arise. See our article here for further details:

You will not need to use the advisory rates where you can show that employees cover the full cost of private fuel by repaying at a lower mileage rate.

Advisory Fuel Rates – New rates from 1 June 2024

Petrol — rates per mile
• 1400cc or less 14p
• 1401cc to 2000cc – 16p
• Over 2000cc – 26

LPG — rate per mile
• 1400cc or less 11p
• 1401cc to 2000cc 13p
• Over 2000cc 21p

Diesel – Rate per mile
• 1600cc or less 13p
• 1601to 2000cc 15p
• Over 2000cc 20p

Electric – rate per mile – 8p

Drivers of fully electric vehicles will be interested to note that the 8p per mile rate for use from 1 June 2024 was 9p per mile in the previous quarter.  There is a growing lobby group that is arguing for a higher mileage rate if a car is charged on commercial charging points rather than charging at home.

Perhaps HMRC will create two rates to accommodate these commercial differences in electricity charging rates.

It is important to note that these fuel advisory rates are reviewed on a quarterly basis so you should check regularly for the latest advisory fuel rates.

Fuel Advisory Rates – Mileage in private cars

For the avoidance of doubt the above is for the use of a company car. Where a car that is owned personally is used for business then different fuel rates apply. For cars this is 45p per mile for the first 10,000 business miles in the tax year and 25p per mile for any subsequent business miles.

Need help with Fuel Advisory Rates?  We can help

If you need a hand setting up effective use of the above rates for your company car drivers, please call. The Car Fuel Benefit Charge that applies to employees who are funded by their company for private fuel costs is a punitive tax charge and best avoided by simply repaying any private fuel provided by applying the above rates to a record of private miles in the tax year.

To avoid Car Fuel Benefit Charges for the tax year 2023-24, repayments for private fuel need to be made on or before 6th July 2024.

If you would like to speak to a member of our tax team about how you apply Fuel Advisory Rates, or have any other questions in respect of company cars, please contact us on 020 7870 9050 or email us and a member of our team will reply as soon as they are available.

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