Advisory fuel rates for company cars
New advisory fuel rates for company cars have been published and took effect from 1st September 2022.
The guidance states: ‘you can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.
If the mileage rate that your employees pay falls under the advisory fuel rates for the specific engine size and fuel type of the company car, no taxable profit and Class 1A National Insurance will need to be paid.
If the company car being used is more economical than what the guideline rates, custom rates will be allowed in this instance.
If in the event of private use of a company car by an employee, businesses will not need to use the advisory rates for private fuel usage. This is dependent on whether if there is sufficient evidence to prove it.
The advisory fuel rates per mile for journeys undertaken on or after 1st December 2022 are:
| Engine size | Petrol |
| 1400cc or less | 14.4p |
| 1401cc – 2000cc | 17p |
| Over 2000cc | 25.9p |
| Engine size | LPG |
| 1400cc or less | 10p |
| 1401cc – 2000cc | 11.8p |
| Over 2000cc | 18p |
| Engine size | Diesel |
| 1600cc or less | 14.2p |
| 1601cc – 2000cc | 17.2p |
| Over 2000cc | 22.1p |
HMRC guidance states that the rates only apply when you either:
- reimburse employees for business travel in their company cars
- require employees to repay the cost of fuel used for private travel.
You must not use these rates in any other circumstances.
The Advisory Electricity Rate for fully electric cars is 8p per mile. Electricity is not a fuel for car fuel benefit purposes.
Amy Telford, Director at HTB Accountants, says that it’s important to maintain control and keep track of recording this kind of financial transaction:
“Regardless of size, many businesses don’t have the resources and knowledge for bookkeeping. With these clients, our first step is to gain total understanding of their business and what it provides – this ensures our approach is centered around the needs of the client. Of course, that requires a professional level of service that would need to be delivered.”
If you would like to discuss your company car policy, please contact the team today. For more information, visit the GOV.UK website.
