The price of road fuel has increased significantly in the last few months and HMRC has responded by raising all of the advisory fuel mileage rates for company cars. The new rates can be used for business journeys taken from 1 December 2021, where the employee pays for the fuel.
The old mileage rates for the period from 1 September to 30 November 2021 are shown in brackets:
Advisory fuel rates from 1 December
| Engine Size | Petrol - rate per mile | LPG - rate per mile |
|---|---|---|
| 1400cc or less | 13p (12p) | 9p (7p) |
| 1401cc to 2000cc | 15p (14p) | 10p (8p) |
| Over 2000cc | 22p (20p) | 15p (12p) |
| Engine Size | Diesel - rate per mile | LPG - rate per mile |
|---|---|---|
| 1600cc or less | 11p (10p) | |
| 1601 to 2000cc | 13p (12p) | |
| Over 2000cc | 16p (15p) |
The advisory mileage rate for electric vehicles has also increased from 4p per mile to 5p per mile from 1 December 2021. This is a significant 25% uplift, and the first change in the EV rate since it was introduced in 2018. However, it is definitely needed as the cost of electricity has also increased dramatically recently.
The provision of an EV (car or van) to an employee or director is still very tax efficient. Although the taxable benefit for electric cars is due to double from 1% to 2% of list price on 6 April 2022, it will be frozen at that level until at least 6 April 2025. There is currently zero taxable benefit for using an electric company van for private journeys.
Written by the Tax Advice Network