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Business woman at fuel pump

Motoring costs don’t get easier: latest company car business mileage rates drop in the main engine category

COMPANY car drivers in mid-range cars will not take kindly to this news: the company car business mileage rates are dropping by a penny a mile from 01 June 2013.

The change has been instigated by HMRC’s quarterly review of company car business mileage rates and will remain in place until the end of August.

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The drop in the mileage rate affects drivers of petrol and diesel cars with engines between 1401cc to 2000cc; and diesel cars of 1600cc capacity and less.

It will also affect drivers of petrol cars with engines of more than 2.0-litres.

For petrol company cars in the main 1401cc to 2000cc engine band, the business mileage rate drops from 18p per mile to 17p per mile. For diesel company cars, the business mileage rates drop from 15p to 14p. For smaller engined diesel drivers (1600cc and less) the rate drops to 12p.

The business mileage rates are known as Advisory Fuel Rates by HMRC (often shortened to AFR).

The Advisory Fuel Rates are used by company car drivers to claim business mileage in a company car.

Alternatively, if a company supplies a company fuel card to pay for all fuel at point of purchase, the AFRs can be used to deduct private mileage – and therefore sidestep the punitive ‘free fuel’ tax (see Free fuel more expensive).

The business mileage rates for the smallest engine size and the larger engine size remain unchanged.

HMRC reviews the average cost of fuel and a ‘real world’ adjustment of car manufacturers’ fuel figures to calculate the AFRs.

Petrol electric hybrids should use the petrol business mileage scale; diesel electric hybrids the diesel scale.


New company car business mileage Advisory Fuel Rates from 01 June 2013 for petrol and LPG cars

  • Engine size 1400cc or less: 15p (petrol); 10p (LPG)
  • 1401cc to 2000cc: 17p (petrol) – previously 18p; 12p (LPG)
  • Over 2000cc: 25p (petrol) – previously 26p; 18p (LPG)


New company car business mileage Advisory Fuel Rates from

01 June 2013 for diesel cars

  • Engine size 1600cc or less: 12p – previously 13p
  • 1601cc to 2000cc: 14p – previously 15p
  • Over 2000cc: 18p

Click here to see the previous Advisory Fuel Rates

HMRC says the new business mileage rates apply from 01 June, although employers are free to use the older figures for June if they wish.

The AA Mileage Calculator is a clever new app to help you keep track of your business mileage.

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