Drivers face new HMRC per mile charges rate from September

HMRC’s advisory fuel rates for company car mileage charges are set to be announced in the coming weeks, determining how much petrol and diesel drivers will pay per mile from September 1

Drivers will discover within a matter of weeks how much they will be paying from September, whether they use company cars or drive their personal vehicles for work purposes. HM Revenue and Customs (HMRC) updates its advisory fuel rates on a quarterly basis, and the figures for the next quarter, commencing September 1, are due to be confirmed shortly.

HMRC reviews the charges every three months, adjusting them in line with the current cost of petrol, diesel and EV charging. The tax authority has set the current rate for cars with an engine exceeding 2,000cc at 26p per mile.

Two lower rates also apply for smaller engines, with 14p per mile for cars with engines of 1,400cc or below, and 17p per mile for those with engines between 1,401cc and 2,000cc.

The rates have risen considerably since 2022, when a 2,000cc car was charged at just 15p per mile. For money-saving tips, sign up to our Money newsletter here

The new rate for the forthcoming quarter is anticipated to be announced within the next few weeks, reports the Express.

Spanish manufacturer Seat explains how they work: “If you’re reimbursing employees for business travel in their company cars at a set pence per mile rate, then you need to be aware of the latest advisory fuel rates.

“Set quarterly by the Government, advisory fuel rates are designed to reflect the typical cost of fuel when driving a company car.”

How much tax company car drivers will pay on fuel costs depends on the mileage rate your business uses when processing expense claims:

• at advisory fuel rates, your employees won’t incur any tax liability
• below advisory fuel rates, they may be eligible for a tax rebate;
• above advisory fuel rates, company car drivers may be liable for additional tax (unless they can explain why the cost is higher).

Company car drivers can also reduce benefit-in-kind costs by paying back their private mileage.

What HMRC says about the rates

These rates only apply to employees using a company car. Use the rates when you either:

• reimburse employees for business travel in their company cars
• need employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.