DID you know that HMRC increased the company car mileage rates that can be charged?
The latest company car business mileage rates, known as the HMRC Advisory Fuel Rates, or AFRs for short, kicked in from the beginning of last December and have remained the same during this year’s quarterly reviews.
Company car drivers in diesels over 2.0-litre capacity can charge an extra 1p per mile for all business mileage incurred, now set at 14p per mile.
However, for other drivers of diesel company cars, and all petrol company cars, there has been no change from the rates announced last September.
The all-new Advisory Electricity Rate, also introduced in September, is 4p per mile. There is no car fuel benefit tax implication for using these figures, since HMRC does not consider electricity a fuel.
These rates apply to fully electric cars – not Plug-in Electric Vehicles (PHEVs).
If you drive a hybrid company car, then the business mileage rates reflect the appropriate petrol or diesel AFRs depending on whether you have a petrol or a diesel hybrid. This includes plug-in hybrids.
Company car business mileage rates are used to claim back business mileage in company cars; or to repay private mileage if all fuel is provided by the company – this avoids car fuel benefit tax.
Updated company car business mileage rates are listed below
etrol: Company car mileage rates from December 01, 2018
Engine size 1400cc or less: 12p – unchanged
1401cc to 2000cc: 15p – unchanged
Over 2000cc: 22p – unchanged
Diesel: Company car mileage rates from December 01, 2018
Engine size 1600cc or less: 10p – unchanged
1601cc to 2000cc: 12p – unchanged
Over 2000cc: 14p –unchanged
Hybrid powered company car mileage rates
Drivers of petrol/electric hybrid company cars should use the petrol rates.
Drivers of diesel/electric hybrid cars should use the diesel rates.
Advisory electricity company car mileage rate from December 01, 2018
Fully electric car – 4p
LPG fuelled company car mileage rates from December 01, 2018
Engine size 1400cc or less: 8p – up 1p;
1401cc to 2000cc: 9p – down 3p;
Over 2000cc: 14p – down 1p
The figures are calculated using the latest petrol and diesel prices from Department for Business, Energy & Industrial Strategy, LPG (UK Average) from the Automobile Association (AA) website.
Figures are weighted to reflect sales to business and adjusted downwards to reflect real driving economy conditions.
What about business mileage rates for private cars?
The Advisory Fuel Rate company car business mileage rates are to be used by company car drivers and should not be confused with Approved Mileage Allowance Payments, known as AMAPs.
These AMAP payments are the tax-free pence-per-mile rates applicable only when drivers use their private cars for business purposes.
Remember also business drivers will benefit from the recently announced freeze on company car tax.
The Government announced a freeze on company car tax for fleet cars and the introduction of a zero Benefit-in-Kind rate for fully electric vehicles as part of its WLTP review.
Those with vehicles registered before 6 April 2020 will see company car tax bands being frozen at the 2020/21 rates until 2022/23.
Those registering new cars after 6 April 2020 will see a two-percentage point tax cut while all zero-emission company will pay no tax.
After the two-percentage point decrease in 2020/21, rates will then increase by one percentage point in 2021/22 and 2022/23.
The government also confirmed it will aim to announce appropriate percentages at least two years ahead of implementation to provide certainty for employers, employees and fleet operators
Existing VED rates will be maintained on introduction of WLTP from April 2020 while a call for evidence will be published later this year seeking views on moving towards a more dynamic approach to VED which recognises smaller changes in CO2 emissions
The changes do not affect the Lease Rental Restriction, Capital Allowances or any other CO2-related taxes and incentives but will include fuel benefit charge.
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Chris Wright has been covering the automotive industry nationally and internationally for 30 years. Following spells with consumer titles he became News Editor of Automotive Management (AM), Editor of Automotive International, International Editor for Detroit-based Automotive News, and Editor of Dealer Update. He has also co-authored several FT Management Reports and contributes regularly to Justauto.com
When a company pays for the fuel and charges for private mileage do they have to adhere to the advisory rates or can they charge what they wish?
For example for my company car the AFR is 11p a mile. My company wish to charge 26p a mile and justify this by saying the 15p above the AFR is to help with lease cost, maintenance and tyres etc.
Is there any way around paying more than double? An HMRC advisor told me I could claim tax relief on the 15p above the the AFR but I’m not convinced this advice was correct?
Hello David
Thank you for your enquiry. We would follow the HMRC advisor’s advice. The AFR payments exist to ensure there is no benefit in kind incurred. So if a company paid more than the AFR rate for business mileage, the amount above the rate would be subject to income tax.
Therefore if your company is charging you above the AFR rate for private mileage,then tax relief is available. Hopefully, the advisor explained to you how to get your tax relief. But if not, this Mileage Allowance Relief article should help you.
Hi, I’m a little confused with what to charge our employee for personal mileage on a petrol/hybrid car. Should we be charging them 15p a mile as it is a 2000cc? If this is the case I’m sure they will argue that we are making money on them.For example, if they only put £20 of fuel in a month but do 1000 personal miles in the month we would charge £150 back to them.Their argument will be that it has only cost £20.What is the way around this?
When a company pays for the fuel and charges for private mileage do they have to adhere to the advisory rates or can they charge what they wish?
For example for my company car the AFR is 11p a mile. My company wish to charge 26p a mile and justify this by saying the 15p above the AFR is to help with lease cost, maintenance and tyres etc.
Is there any way around paying more than double? An HMRC advisor told me I could claim tax relief on the 15p above the the AFR but I’m not convinced this advice was correct?
Hello David
Thank you for your enquiry. We would follow the HMRC advisor’s advice. The AFR payments exist to ensure there is no benefit in kind incurred. So if a company paid more than the AFR rate for business mileage, the amount above the rate would be subject to income tax.
Therefore if your company is charging you above the AFR rate for private mileage,then tax relief is available. Hopefully, the advisor explained to you how to get your tax relief. But if not, this Mileage Allowance Relief article should help you.
Ralph Morton, editor
My employer has worked out his own rates based on the cost of fuel and applied it to the private miles element of our employees’ mileage.
His rate is LESS than the AFRs. Is he right to do this or should I insist he uses the AFRs as a minimum to avoid any possible issue with BIKs?
I look forward to hearing your thoughts :)
Thanks for your comment – your employer can do this and as long as they are less than the AFRs there are no BIK implications.
Ralph Morton, Editor
Hi, I’m a little confused with what to charge our employee for personal mileage on a petrol/hybrid car. Should we be charging them 15p a mile as it is a 2000cc? If this is the case I’m sure they will argue that we are making money on them.For example, if they only put £20 of fuel in a month but do 1000 personal miles in the month we would charge £150 back to them.Their argument will be that it has only cost £20.What is the way around this?