HMRC’s New Fuel Rates Impact Millions of Drivers
Motorists across the UK are facing adjusted advisory fuel rates released today by HM Revenue and Customs (HMRC). These new rates, which are used to calculate company car tax allowances, will see increased costs for petrol and diesel vehicle owners.
For diesel cars with engines up to 1,600cc, the rate has increased by 1p, rising from 11p to 12p per mile. Petrol vehicles with engines between 1,401cc and 2,000cc will also see a 1p increase, moving from 14p to 15p per mile. However, the advisory electricity rate for fully electric company cars remains unchanged at 7p per mile, HMRC confirmed.
These quarterly reviewed rates are used when employers reimburse employees for business travel in company cars, or when employees repay the cost of fuel used for private travel.
Diesel Vehicle Adjustments
The adjustment for diesel vehicles is based on a calculation using an average miles per gallon (MPG) of 56.9 and a fuel price of 146.1p per litre. Diesel rates for larger engines remain unchanged, with vehicles between 1,601-2,000cc staying at 13p per mile, and those over 2,000cc continuing at 17p per mile.
Petrol Vehicle Calculations
Petrol vehicle rates have been adjusted based on calculations using a mean MPG of 42.3 and a current fuel price of 138.7p per litre. Prices for other petrol engines are unchanged.
HMRC noted that the advisory electric rate is based on an electrical efficiency of 3.57 miles per kilowatt hour, as well as a domestic electricity cost of 25.24p per kilowatt hour. These figures produce a rate per mile of 7.06p, which is rounded to 7p for the advisory electric rate. The AER is calculated using electrical price data from the Department for Energy Security and Net Zero and the Office for National Statistics.
The rates for liquefied petroleum gas (LPG) vehicles remain unchanged in this latest quarterly review. HMRC also confirmed that hybrid cars will continue to be treated as either petrol or diesel cars for advisory fuel rate purposes, depending on the primary fuel type of the hybrid vehicle.
HMRC also stated that previous rates can be used for up to one month from the date any new rates apply. This means the December 2024 rates can still be used until March 31, 2025, if necessary.
Cowgills Accountants have stated that while the fuel rates are not compulsory, employers can use them to calculate fuel mileage rates, using the exact prices paid at the pump and the fuel consumption figures for the vehicles used.
These advisory fuel rates are not compulsory but can be used by employers to calculate their fuel mileage rates, using the exact prices paid at the pump and the fuel consumption figures for the vehicles used.
