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.
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.
Northgate are in it for the long haul
WHEN it comes to long term rental, Northgate offers a comprehensive range of support packages for SMEs, with a wide range of fleet solutions to meet the diverse needs of
ChargedEV – helping SMEs on their electrification journey
CHARGEDEV specialises in the supply and installation of Electric Vehicle charging equipment across the UK and having installed over 23,000 domestic and workplace EV chargers to date, it has become
R2C – digitising the fleet management process
R2C Lite has been created to eliminate labour-intensive administration processes, aid compliance and increase business productivity for SME fleets running HGVs, vans, trucks, trailers and more, many of which will
Northgate’s mobility solutions keeping you on the road
NORTHGATE Vehicle Hire's additional mobility solutions options and support packages can be built into its existing rental contracts, cutting down the need for multiple supplier agreements to be signed and
BMW – looking after fleets large and small
WHETHER you are a sole trader looking for a car that works for your business or you manage a fleet of fewer than 50 company cars, the BMW Business Partnership
BMW i4 – makes a lot of sense for the company car driver
THE new BMW i4 is the German premium brand's first ever all-electric Gran Coupé and it's a very interesting proposition for company car drivers with a 2% BIK rate for
Innovation drives Wilson Auctions’ success
AS one of the first in the industry to introduce MVR (Motor Vehicle Repair Workshops) on its various auction sites nationwide, Wilson Auctions was highly commended in this year's Business
Tax efficiency – BMW’s X1 PHEV, a Business Motoring winner
BMW's X1 xDrive 25e is a Business Motoring winner, picking up the Best Small SUV gong at this year's awards. It features a 1.5-litre three-cylinder petrol engine and electric motor
BMW X5e – makes real sense to drivers and fleet managers
THE BMW X5 xDrive 45e offers user-choosers a large SUV which delivers low running costs and associated tax bills. Thanks to CO2 emissions of 27-31g/km, the X5 falls into the
Van Monster Remarketing – tops for Business Motoring Awards
EXCEPTIONAL levels of customer service are at the heart of the Van Monster Remarketing proposition. The personal nature of the service provided by its Remarketing account managers has enabled to grow
BMW iX electrifies the Business Motoring Award judges
THE BMW iX will add electric performance to any forward-thinking fleet manager, as well as a spacious, lounge-like interior to keep drivers focussed on the road ahead, with a range
BMW iX3 brings electricity into the mainstream
Following the i3 and i8, the BMW iX3 is the brand's first electric SUV and the winner of this Year's Business Motoring Awards Best Medium SUV category. And the electric
Executive express – BMW530e offers savings for company car drivers
THE BMW 5 Series Saloon is the epitome of a sporty business saloon and The 530e plug-in hybrid models combine performance and frugality to create an optimised executive car. With
KeyFleet Partner Programme – Best Company Car Programme winner
WITH electric vehicles on the rise and with many government initiatives and support of the EV revolution, KeyFleet has become an ambassador for EVs.All employees are trained in Whole Life
Keeping up with the times – Europcar, Business Motoring Award winner
MULTI-MODEL mobility is becoming increasingly important for SMEs, particularly in the short-term rental arena and the EuropcarOne mobility platform provides seamless access to a full range of solutions, from daily
SOGO – Business Motoring Best Mobility Provider Winner
SHORT-TERM leasing is essential to the mass adoption of electric vehicles before 2030 when sales of all new cars and vans powered wholly by petrol and diesel will be banned.
Flexibility is key – Europcar, Best Long Term Rental
FROM COVID-19 and semi-conductor shortages impacting on vehicle supply to rising inflation and uncertain trading conditions, the past 12 months have not been easy for any business. But they have
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?