As the result of recent increases in petrol and diesel prices, HMRC has increased the advisory fuel rates that apply for the reimbursement of employees’ private fuel for their company cars. The same rates apply when the employer reimburses employees for fuel used for business journeys in their company car. Curiously the LPG reimbursement rates have been reduced, which appears to be an anomaly.
The new rates apply from 1 September 2021, but you can continue to use the previous rates for up to 1 month from the date the new rates apply.
Where there has been a change the previous rate is shown in brackets: –
|1400cc or less||12p (11p)||7p (8p)|
|1600cc or less||10p (9p)|
|1401cc to 2000cc||14p (13p)||8p (9p)|
|1601 to 2000cc||12p (11p)|
|Over 2000cc||20p (19p)||15p (13p)||12p (14p)|
For hybrid cars you must use the petrol or diesel rate which may differ significantly from the actual fuel costs. The advisory electricity rate for fully electric cars is 4 pence per mile.
Employees should carefully consider whether it is advantageous having fuel for private motoring provided for their company car. Remember that the P11d benefit for having private fuel provided for a company car in 2021/22 is £24,600 multiplied by the CO2 emissions percentage for that vehicle.
For example, a director driving a Mercedes Benz E200 saloon company car (CO2 emissions 169g per km) would be assessed on 37% = £9,102 for 2020/21. If they are a higher rate taxpayer that would mean £3,641 tax on the fuel used for their private, non-business motoring. £303 per month would buy an awful lot of private fuel! In most cases, company car drivers are better off buying their own fuel and claiming for the business mileage from their employer at the rates above.
Contact us if you would like us to do the sums for you on providing or receiving a company car or employer-provided fuel.