Change in Advisory Fuel Rates from 1 December 2019

HM Revenue & Customs (HMRC) has changed the advisory fuel rates for company cars with effect from 1 December 2019, but for one month from the date of change, employers may use either the previous or new current rates, as they choose. HMRC will review these rates quarterly on 1 December, 1 March, 1 June and 1 September.

Advisory fuel rates are the guideline rates at which employers can reimburse employees for company car fuel without tax or NIC implications, removing the need for a detailed calculation of the actual cost of the fuel.

This applies to:

• Reimbursement for business travel by employees in their company cars, where all the fuel (for private and business travel) is bought by the employee;
• Employees required to repay the cost of fuel used for private travel in company cars, to avoid a company car fuel benefit (where the company buys all the fuel).

The rates are advisory only, so it is possible for employers to use the actual costs of business fuel instead if they prefer.

HMRC will also accept these rates for the reclaim of VAT on the fuel element of mileage rates paid to employees; though employers will need to retain the necessary VAT receipts.

The new rates are set out in the table below and apply to all journeys on or after 1 December 2019:

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

The Advisory Electricity Rate for fully electric cars is 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.

These rates are not relevant to:

• Employers who make mileage payments to employees who use their own car for business journeys.

The HMRC Authorised Mileage Allowance Payments for such business journeys are 45p per mile for the first 10,000 miles in a tax year and 25p per mile thereafter. So long as the rate per mile paid to employees is less than these amounts, the payments are tax and NI free.