As an agent you undoubtedly spend a great deal of time on the road. Travelling between properties is part of the day-to-day routine, and so HMRC’s decision to cut advisory fuel rates for users of company petrol and diesel vehicles from 1 March will be welcome news for many property professionals.
The advisory fuel rates that apply from tomorrow have been reduced by between 1p and 2p for petrol and diesel engines. There was a 1p increase in LPG engine rates for lower cc vehicles while rates were up by three pence per mile for 2000cc plus vehicles.
The previous rates, effective from December 2023, can be used for up to one month from the date the new rates apply.
The rates only apply in the following circumstances:
+ reimburse employees for business travel in their company cars; or
require employees 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.
From 1 March 2024 the advisory electricity rate for fully electric cars remain unchanged at 9p per mile. In line with advisory fuel rates, this electric rate is now being reviewed quarterly.
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.
Guidance from HMRC:
When you can use the mileage rates
These rates only apply to employees using a company car.
Use the rates when you either:
- reimburse employees for business travel in their company cars
- need employees to repay the cost of fuel used for private travel
You must not use these rates in any other circumstances.
Reimburse employees for company car business travel
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’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.
Employees to repay the cost of fuel used for private travel
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.
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.
How rates are calculated
HMRC reviews rates quarterly on:
- 1 March
- 1 June
- 1 September
- 1 December
The mean miles per gallon (MPG) is taken from manufacturers’ information, taking into account annual sales to businesses (Fleet Audits average 2020 to 2022).
For liquefied petroleum gas (LPG), the MPG used is 20% lower than for petrol due to lower volumetric energy density.
The ‘rates per mile’ calculated in these tables are shown rounded to one decimal place, but the final advisory fuel rates are rounded to the nearest whole penny.
Rates per mile which end in 0.5 are rounded down to the nearest whole penny for the advisory fuel rate when the underlying unrounded figure ends in a number less than 0.5 (for example 0.487).
When the underlying unrounded figure ends in a number greater than 0.5 (for example 0.513) it is rounded up to the nearest whole penny.
The latest petrol and diesel prices are taken from the Department for Energy Security and Net Zero (DESNZ) and the LPG (UK average) is from the Automobile Association website.
The advisory electric rate for fully electric cars is calculated using electrical price data from:
- Department for Energy Security and Net Zero
- Office for National Statistics (ONS)
- car electrical consumption rates from the Department for Transport (DfT)
- annual car sales volumes to businesses (Fleet Audits average for the last 3 years)
The DESNZ annually published “pence per kilowatt hour” cost is uprated by the quarterly ONS Consumer Prices Index for electricity to account for quarterly price variations.
The value of the annual equivalent rate is then calculated by taking the cost of electricity per mile for each model provided by the DfT and electricity price data from DESNZ and ONS. Based on company car sales data across the last 3 years, a weighted average value of the electrical costs per mile for a fully electric car is then calculated.
The advisory fuel rates are worked out from the fuel prices in these tables.
Petrol
| Engine size (cc) | Mean MPG | Fuel price (per litre) | Fuel price (per gallon) | Rate per mile | Advisory fuel rate |
|---|---|---|---|---|---|
| Up to 1400 | 49.5 | 140.6 pence | 639.0 pence | 12.9 pence | 13 pence |
| 1401 to 2000 | 42.1 | 140.6 pence | 639.0 pence | 15.2 pence | 15 pence |
| Over 2000 | 26.7 | 140.6 pence | 639.0 pence | 24.0 pence | 24 pence |
Diesel
| Engine size (cc) | Mean MPG | Fuel price (per litre) | Fuel price (per gallon) | Rate per mile | Advisory fuel rate |
|---|---|---|---|---|---|
| Up to 1600 | 56.7 | 149.4 pence | 679.0 pence | 12.0 pence | 12 pence |
| 1601 to 2000 | 48.0 | 149.4 pence | 679.0 pence | 14.2 pence | 14 pence |
| Over 2000 | 36.3 | 149.4 pence | 679.0 pence | 18.7 pence | 19 pence |
LPG
| Engine size (cc) | Mean MPG | Fuel price (per litre) | Fuel price (per gallon) | Rate per mile | Advisory fuel rate |
|---|---|---|---|---|---|
| Up to 1400 | 39.6 | 96.5 pence | 438.7 pence | 11.1 pence | 11 pence |
| 1401 to 2000 | 33.7 | 96.5 pence | 438.7 pence | 13.0 pence | 13 pence |
| Over 2000 | 21.3 | 96.5 pence | 438.7 pence | 20.6 pence | 21 pence |
Electric
From 1 March 2024, the advisory electric rate for fully electric cars will be 9 pence per mile.
Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.
The advisory fuel rates for petrol, LPG and diesel cars are shown in these tables.
You can use the previous rates for up to 1 month from the date any new rates apply.
From 1 March 2024
| Engine size | Petrol — rate per mile | LPG — rate per mile |
|---|---|---|
| 1400cc or less | 13 pence | 11 pence |
| 1401cc to 2000cc | 15 pence | 13 pence |
| Over 2000cc | 24 pence | 21 pence |
| Engine size | Diesel — rate per mile |
|---|---|
| 1600cc or less | 12 pence |
| 1601cc to 2000cc | 14 pence |
| Over 2000cc | 19 pence |
| Electric — rate per mile |
|---|
| 9 pence |
From 1 December 2023 to 29 February 2024
| Engine size | Petrol — rate per mile | LPG — rate per mile |
|---|---|---|
| 1400cc or less | 14 pence | 10 pence |
| 1401cc to 2000cc | 16 pence | 12 pence |
| Over 2000cc | 26 pence | 18 pence |
| Engine size | Diesel — rate per mile |
|---|---|
| 1600cc or less | 13 pence |
| 1601cc to 2000cc | 15 pence |
| Over 2000cc | 20 pence |
| Electric — rate per mile |
|---|
| 9 pence |
From 1 September 2023 to 30 November 2023
| Engine size | Petrol — rate per mile | LPG — rate per mile |
|---|---|---|
| 1400cc or less | 13 pence | 10 pence |
| 1401cc to 2000cc | 16 pence | 12 pence |
| Over 2000cc | 25 pence | 19 pence |
| Engine size | Diesel — rate per mile |
|---|---|
| 1600cc or less | 12 pence |
| 1601cc to 2000cc | 14 pence |
| Over 2000cc | 19 pence |
| Electric — rate per mile |
|---|
| 10 pence |
From 1 June 2023 to 31 August 2023
| Engine size | Petrol — rate per mile | LPG — rate per mile |
|---|---|---|
| 1400cc or less | 13 pence | 10 pence |
| 1401cc to 2000cc | 15 pence | 12 pence |
| Over 2000cc | 23 pence | 18 pence |
| Engine size | Diesel — rate per mile |
|---|---|
| 1600cc or less | 12 pence |
| 1601cc to 2000cc | 14 pence |
| Over 2000cc | 18 pence |
| Electric — rate per mile |
|---|
| 9 pence |
From 1 March 2023 to 31 May 2023
| Engine size | Petrol — rate per mile | LPG — rate per mile |
|---|---|---|
| 1400cc or less | 13 pence | 10 pence |
| 1401cc to 2000cc | 15 pence | 11 pence |
| Over 2000cc | 23 pence | 17 pence |
| Engine size | Diesel — rate per mile |
|---|---|
| 1600cc or less | 13 pence |
| 1601cc to 2000cc | 15 pence |
| Over 2000cc | 20 pence |
| Electric — rate per mile |
|---|
| 9 pence |
From 1 December 2022 to 28 February 2023
| Engine size | Petrol — rate per mile | LPG — rate per mile |
|---|---|---|
| 1400cc or less | 14 pence | 10 pence |
| 1401cc to 2000cc | 17 pence | 12 pence |
| Over 2000cc | 26 pence | 18 pence |
| Engine size | Diesel — rate per mile |
|---|---|
| 1600cc or less | 14 pence |
| 1601cc to 2000cc | 17 pence |
| Over 2000cc | 22 pence |
| Electric — rate per mile |
|---|
| 8 pence |
From 1 September 2022 to 30 November 2022
| Engine size | Petrol — rate per mile | LPG — rate per mile |
|---|---|---|
| 1400cc or less | 15 pence | 9 pence |
| 1401cc to 2000cc | 18 pence | 11 pence |
| Over 2000cc | 27 pence | 17 pence |
| Engine size | Diesel — rate per mile |
|---|---|
| 1600cc or less | 14 pence |
| 1601cc to 2000cc | 17 pence |
| Over 2000cc | 22 pence |
| Electric — rate per mile |
|---|
| 8 pence |
From 1 June 2022 to 31 August 2022
| Engine size | Petrol — rate per mile | LPG — rate per mile |
|---|---|---|
| 1400cc or less | 14 pence | 9 pence |
| 1401cc to 2000cc | 17 pence | 11 pence |
| Over 2000cc | 25 pence | 16 pence |
| Engine size | Diesel — rate per mile |
|---|---|
| 1600cc or less | 13 pence |
| 1601cc to 2000cc | 16 pence |
| Over 2000cc | 19 pence |
| Electric — rate per mile |
|---|
| 5 pence |
From 1 March 2022 to 31 May 2022
| Engine size | Petrol — rate per mile | LPG — rate per mile |
|---|---|---|
| 1400cc or less | 13 pence | 8 pence |
| 1401cc to 2000cc | 15 pence | 10 pence |
| Over 2000cc | 22 pence | 15 pence |
| Engine size | Diesel — rate per mile |
|---|---|
| 1600cc or less | 11 pence |
| 1601cc to 2000cc | 13 pence |
| Over 2000cc | 16 pence |
| Electric — rate per mile |
|---|
| 5 pence |
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