HMRC has published the latest advisory fuel rates for company car users, effective from 1 March 2021. The previous rates, effective December 2020, can be used for up to one month from the date the new rates apply.
The new advisory rates (amount per mile) are:
Petrol: 1400cc or less – 10p; 1401cc-2000cc – 12p; over 2000cc – 18p
LPG: 1400cc or less – 7p; 1401cc-2000cc – 8p; over 2000cc – 12p
Diesel: 1600cc or less – 9p; 1601cc-2000cc – 11p; over 2000cc – 12p
Hybrid cars are treated as either petrol or diesel cars for this purpose.
The rates only apply in the following circumstances:
- to reimburse employees for business travel in their company cars; or
- when employees are required to repay the cost of fuel used for private travel.
These rates cannot be used in any other circumstances. If the rates are used, it is not necessary to apply for a dispensation to cover the payments made.
The advisory electricity rate for fully electric cars is unchanged at 4p per mile. Electricity is not a fuel for car fuel benefit purposes.
When employees are reimbursed for business travel in their company cars, HMRC will accept there is no taxable profit and no Class 1A national Insurance to pay.