HMRC’s updated advisory fuel rates

HMRC’s updated advisory fuel rates

For employees reclaiming business mileage in company cars, HMRC have published their advisory fuel rates for use from 1 December 2023.

While the advisory rate for electric vehicles has seen a decrease, there have been some increases across petrol and diesel engines. The latest rates are as follows:

Petrol/liquefied petroleum gas (LPG)

Diesel

Hybrid and electric cars

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

After being increased in the last quarterly review by HMRC, the advisory electricity rate for fully electric cars has decreased from 10p to 9p per mile.

Considerations for employers and employees

These rates only apply when:

• Employees are reimbursed for business travel in their company cars
• Company car drivers reimburse their employers for private mileage when the company pays for fuel

The advisory rates are the amounts that can be paid without a charge to tax and National Insurance (NI) arising. Also, the previous quarter’s rates can be used for up to one month from the date the new rates apply.

There is no obligation for an employer to use HMRC’s Advisory Fuel Rates - they can opt to use actual costs as long as sufficient records are maintained to support these costs.

As a reminder, employees undertaking business miles in their own car can be reimbursed using the Approved Mileage Allowance Payment (AMAP) rate which is currently 45p per mile up to 10,000 business miles and 25p per mile thereafter. AMAPs are designed to cover all the costs associated with using a car and not just the fuel costs.

We are here to help

If you have any questions about the new HMRC advisory rates, please get in touch with a member of our specialist Employment Tax team or your usual Azets advisor.