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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.

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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