The advisory fuel rates for claiming back mileage in a company car from 1 September 2021 are as follows:

Engine size                          Petrol – amount per mile             LPG – amount per mile

1400cc or less                    12 pence                                             7 pence

1401 to 2000cc                  14 pence                                             8 pence

Over 2000cc                       20 pence                                            12 pence

Engine size                         Diesel – amount per mile

1600cc or less                    10 pence

1601 to 2000cc                  12 pence

Over 2000cc                       15 pence

For the purposes of claiming back mileage, hybrid cars can be treated as either petrol or diesel. The above rates apply from 1 September 2021 but you can use the previous rates up to 30 September 2021 if desired.

Advisory Electricity Rate

For fully electric cars, employees can claim back 4 pence per mile when using the car for business purposes. Electricity is not classed as a fuel for car fuel benefit purposes.

Considerations

Given the government’s changing stance on company car taxation and the move towards ‘greener’ cars, it is often worth revisiting which car you drive or which cars you offer in the company car fleet. There are tax considerations for both the employer and employee who will be keen to optimise the tax position whist driving cars that fit the purposes of the business/individual.

If you are thinking about your options, we can explain them to you and help you understand which course of action might ‘tick the boxes’. It is important that all aspects are considered, not just tax, so that an informed decision is made.

If this is an area you’d like help with, please contact Nicola Hawkins on 01527 558539 or [email protected]  Nicola is experienced in all matters of employer and employee taxation, such as benefits in kind, payroll and also personal taxation.