HMRC advisory fuel rates for company car users from 1 December

HMRC has published the latest advisory fuel rates (AFR) for company car users, effective from 1 December 2020, cutting mileage rates for 1400-2000cc petrol vehicles by 1p per mile

The advisory fuel rates that apply from 1 December 2020 have been cut by 1p per mile for petrol vehicles with engines of 1400-2000cc reflecting a slight decrease in fuel prices over the last quarter, while the diesel amount per mile for vehicles across all engine sizes remains unchanged. The previous rates, effective September 2020, can be used for up to one month from the date the new rates apply.

The rates only apply in the following circumstances:

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

These rates cannot be used in any other circumstances. If the rates are used, it is not necessary to apply for a dispensation to cover the payments made.

The advisory electricity rate for fully electric cars is unchanged at 4p per mile. Electricity is not a fuel for car fuel benefit purposes.

When employees are reimbursed for business travel in their company cars, HMRC will accept there is no taxable profit and no Class 1A national Insurance to pay.

Advisory fuel rates from 1 December 2020

Engine size

Petrol - amount per mile

LPG - amount per mile

1400cc or less

10p

7p

1401cc to 2000cc

11p

8p

Over 2000cc

17p

12p

 

Engine size

Diesel - amount per mile

1600cc or less

8p

1601cc to 2000cc

10p

Over 2000cc

12p

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

HMRC reviews rates quarterly on 1 March, 1 June, 1 September and 1 December.

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