As the result of recent increases in fuel prices, HMRC have increased the advisory fuel rates that apply for the reimbursement of employees’ private fuel for their company cars. The same rates apply when the employer reimburses employees for fuel used for business journeys in their company car.
The new rates apply from 1 December 2021, but you can continue to use the previous rates for up to 1 month from the date the new rates apply. Note that the electric car reimbursement rate also increases from 4p to 5p a mile.
Where there has been a change, the previous rate is shown in brackets: –
|1400cc or less||13p (12p)||9p (7p)|
|1600cc or less||11p (10p)|
|1401cc to 2000cc||15p (14p)||10p (8p)|
|1601 to 2000cc||13p (12p)|
|Over 2000cc||22p (20p)||16p (15p)||15p (12p)|
Note that for hybrid cars you must use the petrol or diesel rate which may differ significantly from the actual fuel costs. The advisory electricity rate for fully electric cars is 5 pence per mile (was 4p).
Employees should carefully consider whether it is advantageous having private fuel provided for their company car. Remember that the P11d benefit for having private fuel provided for a company car in 2021/22 is £24,600 multiplied by the CO2 emissions percentage for that vehicle, rising to £25,300 for 2022/23.
For example, a director driving a Mercedes Benz E200 saloon company car (CO2 emissions 169g per km) would be assessed on 37% x £24,600 = £9,102 for 2021/22. If they are a higher rate taxpayer that would mean £3,641 tax. That is an awful lot of private fuel!
On top of that there would be 13.8% Class 1A NIC payable by the employer = £1,256 (15.05% next year = £1,409).