An Organisation for all
Accountants in Practice

Advisory Fuel Rates from 1 September 2018

hmrc logo

By HMRC

These rates apply from 1 September 2018. You can use the previous rates for up to one month from the date the new rates apply.

Engine size

Petrol - amount per mile

LPG - amount per mile

1400cc or less

12 pence

7 pence

1401cc to 2000cc

15 pence

9 pence

Over 2000cc

22 pence

13 pence

 

Engine size

Diesel - amount per mile

1600cc or less

10 pence

1601cc to 2000cc

12 pence

Over 2000cc

13 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Advisory Electricity Rate

The Advisory Electricity Rate for fully electric cars is 4 pence per mile.

Electricity is not a fuel for car fuel benefit purposes.

When you can use the mileage rates

The rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

Reimburse employees for business travel in their company cars

If you pay a rate per mile for business travel no higher than the Advisory Fuel Rates, for the particular engine size and fuel type, HMRC will accept there’s no taxable profit and no Class 1A National Insurance to pay.

You can use your own rates which better reflect your circumstances if, for example, your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates.

If you pay rates that are higher than the advisory rates and cannot demonstrate the fuel cost per mile is higher, there’s no fuel benefit charge if the mileage payments are solely for miles of business travel. Instead, you’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.

Require employees to repay the cost of fuel used for private travel

If you’ve correctly recorded all miles of private travel and used the correct rate (or anything higher) to work out the cost of fuel used for private travel that the employee must repay to you, HMRC will accept there’s no fuel benefit charge.

The advisory rates will not be binding where you can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile.