Using the car fuel rates

Advisory fuel rates for company cars help employers and employees manage fuel costs without triggering tax liabilities. Learn how to use these rates to avoid tax, especially car fuel benefit charges.

HMRC's fuel rates also known as advisory fuel rates are intended to reflect average fuel costs and are updated quarterly. These rates only apply to employees using a company car.

The rates can be used either by employers who reimburse employees for business travel in their company cars or where employees are required to repay the cost of fuel used for private travel.

HMRC will accept that there is no taxable profit and no Class 1A National Insurance on reimbursed travel expenses where employers pay a rate per mile for business travel no higher than the published advisory fuel rates.

Employees can also use the advisory fuel rates to repay the cost of fuel used for private travel. This is the easiest way to ensure that no fuel benefit charge (for private journeys in a company car) is payable. However, the fuel benefit charge will still be payable if it cannot be demonstrated to HMRC that the driver of the car has paid for all fuel used for private journeys, this includes commuting to and from work. To ensure that this does not occur employees will need to keep a log of private mileage.