The advisory fuel rates, paid on company car fuel used, have been reduced – by as much as 2p per mile.

HM Revenue and Customs (HMRC) says the reduction – applicable from 1 February – reflects average fuel costs.

The rates only apply where employers reimburse employees for business travel in their company cars.

Or where companies require staff to repay the cost of fuel used for private travel – for example when a business pays initially for all the driver’s fuel.

The advisory rates are intended to reduce administration and clarify ‘tax-free’ payments. If they are used there is no taxable profit and no Class 1 NIC liability.

The new advisory rates (previous rates in brackets) are as follows:

Engine size


1400cc or less: 9p (11p) petrol; 9p (10p) diesel; 6p (7p) LPG

1401cc to 2000cc: 11p (13p) petrol; 9p (10p) diesel; 7p (8p) LPG

Over 2000cc: 16p (18p) petrol; 12p (14p) diesel; 10p (11p) LPG

Petrol hybrid cars are classed as petrol vehicles by HMRC.

“Reducing reimbursement rates brings fuel efficiency into focus. It should encourage small businesses to consider business car choice and more economical vehicles,” said Harvey Hughes, manager – corporate operations, Honda.

“Small businesses should also start considering the issue of business travel itself. Is it always necessary? And what are the alternatives?”

For further information visit the Law & Tax section by clicking on
www.businessmotoring.co.uk where there is also a link to the HMRC.

HMRC issues new guidance for payments