The latest advisory fuel rates from HM Revenue & Customs (HMRC) come into effect on 1 December 2024, bringing changes to how businesses reimburse employees for company car travel.
With reductions in petrol and diesel rates and an unchanged rate for electric vehicles, is it time to reassess your policies?
What is changing?
- Electric cars – The advisory electricity rate remains 7p per mile, with no changes to cost or efficiency metrics
- Petrol – Rates drop by 1p per mile across all engine sizes. For example:
- Engines up to 1400cc – 12p per mile (down from 13p)
- Over 2000cc – 23p per mile (down from 24p)
- Diesel – Similarly, a 1p reduction applies across all engine sizes
- LPG – Rates remain unchanged
When do these rates apply?
Advisory fuel rates are used for:
- Reimbursing employees for business travel in company cars
- Repaying fuel costs for private use of company vehicles
Following these rates ensures no taxable profit for employees and avoids Class 1A National Insurance liability.
Why it matters for your business
- Cost savings – Small reductions per mile can add up, particularly for fleets or frequent travellers
- Electric vehicle (EV) considerations – While EV rates are static, their lower maintenance and eco-friendly appeal remain strong incentives
- Simpler compliance – Using these rates streamlines reimbursements and reduces tax risks.
Review your policies, inform your team, and make sure your reimbursements align with the new rates.
For more advice on managing these updates, get in touch with our team today.
