The advisory fuel rates for claiming back mileage in a company car from 1 September 2020 are as follows:
Engine size Petrol – amount per mile LPG – amount per mile
1400cc or less 10 pence 7 pence
1401 to 2000cc 12 pence 8 pence
Over 2000cc 17 pence 12 pence
Engine size Diesel – amount per mile
1600cc or less 8 pence
1601 to 2000cc 10 pence
Over 2000cc 12 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 2020 but you can use the previous rates up to 30 September if desired.
These rates apply only when:
- reimbursing employees for business travel in a company car or
- when employees are required to repay the cost of fuel used in private travel
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.
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 via email. Nicola is experienced in all matters of employer and employee taxation, such as benefits in kind, payroll. We also provide advice in the areas of probate, inheritance tax and estate planning to help you protect and preserve your wealth.