HMRC publishes new advisory fuel rates for company cars


HMRC has published its latest set of advisory fuel rates for company cars. The rates are effective from June 1st, 2021, but HMRC’s guidance makes it clear that “you can use the previous rates for up to one month from the date the new rates apply.” These rates should only be used in two instances: to reimburse employees for business travel in their company cars, or when you need employees to repay the cost of fuel if they use a company car for private travel.

Rates are dependent on which fuel your vehicle uses. Current rates are:

Engine SizePetrol
1400cc or less11p
1401cc – 2000cc13p
Over 2000cc19p


Engine SizeLPG
1400cc or less8p
1401cc – 2000cc9p
Over 2000cc11p


Engine SizeDiesel
1600cc or less9p
1601cc – 2000cc11p
Over 2000cc13p


The advisory electricity rate for fully electric cars is 4p per mile, and hybrid cars are treated as either fully petrol or fully diesel vehicles, depending which fuel they use.

HMRC’s guidelines state: “If the mileage rate you pay is no higher than the advisory fuel rates for the engine size and fuel type of the company car, there will be no taxable profit and no Class 1A National Insurance to pay. If your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates, you can use your own rates to reflect your situation.”

If you have any questions about HMRC’s latest guidelines, or need any other business advice, please contact JW Hinks on 0121 456 0190.

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