HMRC Rolls Out Nine New Advisory Fuel Rates for Company Car Drivers
Drivers of company cars across the United Kingdom are facing a series of new advisory fuel rates that have been introduced by HM Revenue and Customs (HMRC). These rates, which apply specifically to vehicles used for business purposes, have been updated and now include nine distinct categories based on engine size and fuel type.
Quarterly Review Process and Calculation Methodology
HMRC conducts a thorough review of advisory fuel rates on a quarterly basis, with updates scheduled for March 1, June 1, September 1, and December 1 each year. The calculation of these rates involves taking the mean miles per gallon (MPG) from manufacturers' data, which incorporates annual sales figures to businesses. This data is averaged from Fleet Audits spanning 2021 to 2023 to ensure accuracy and relevance.
For liquefied petroleum gas (LPG) vehicles, the MPG used in calculations is set 20% lower than that for petrol vehicles. This adjustment accounts for the lower volumetric energy density of LPG compared to traditional petrol fuels.
Rounding Rules and Price Sources
The 'rates per mile' presented in the official tables are initially calculated to one decimal place. However, the final advisory fuel rates are rounded to the nearest whole penny according to specific HMRC guidelines. When the underlying unrounded figure ends in a number less than 0.5, such as 0.487, rates ending in 0.5 are rounded down. Conversely, when the figure ends in a number greater than 0.5, like 0.513, it is rounded up to the nearest whole penny.
HMRC sources the latest petrol and diesel prices from the Department for Energy Security and Net Zero (DESNZ), while LPG prices are obtained from the Automobile Association website, representing the UK average. Additionally, the department annually publishes 'pence per kilowatt hour' costs, which are adjusted quarterly using the Office for National Statistics' Consumer Prices Index for electricity to reflect price variations.
Complete List of New Advisory Fuel Rates
Petrol Vehicles:
- Up to 1,400cc: 12p per mile
- 1,401-2,000cc: 14p per mile
- More than 2,000cc: 22p per mile
Diesel Vehicles:
- Up to 1,600cc: 12p per mile
- 1,601-2,000cc: 13p per mile
- More than 2,000cc: 18p per mile
LPG Vehicles:
- Up to 1,400cc: 10p per mile
- 1,401-2,000cc: 12p per mile
- More than 2,000cc: 19p per mile
These new rates are now in effect at all UK petrol stations, supermarkets, and forecourts, impacting drivers who use company cars for business travel. The adjustments aim to provide fair and updated reimbursement standards based on current fuel prices and vehicle efficiency data.
