New Advisory fuel rates published

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New Advisory fuel rates published

Advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly. The rates can be used by employers who reimburse employees for business travel in their company cars or where employees are required to repay the cost of fuel used for private travel. HMRC accepts there is no taxable profit and no Class 1A National Insurance on reimbursed travel expenses where employers pay a rate per mile for business travel no higher than the published advisory fuel rates.

Employees can also use the advisory fuel rates to repay the cost of fuel used for private travel. In this case, HMRC will accept there’s no fuel benefit charge. The advisory rates are not binding if you the employer can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile.

The latest advisory fuel rates became effective on 1 December 2020. Fuel rates are reviewed four times a year with changes taking effect on 1 March, 1 June, 1 September and 1 December. You can use the previous rates for up to 1 month from the date the new rates apply.

The new rates are as follows:

Engine sizePetrol – amount per mileLPG – amount per mile
1400cc or less10p7p
1401cc to 2000cc11p8p
Over 2000cc17p12p
Engine sizeDiesel – amount per mile
1600cc or smaller8p
1601cc to 2000cc10p
Over 2000cc12p

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Advisory Electricity Rate
HMRC accepts that if you pay up to 4p per mile when reimbursing your employees for business travel in a fully electric company car there is no profit. While electricity is not considered fuel for tax and NICs purposes, the Advisory Electricity Rate is now published quarterly alongside the other advisory fuel rates.

Drop us a message if these all seem a little confusing and we’ll be happy to help. Get in touch

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