HMRC unveils new fuel rates for drivers impacting petrol, diesel and electric vehicles with new prices

The fuel rates are used by businesses to reimburse employees for business travel in company cars or when employees need to repay the cost of fuel used for private travel.

For petrol vehicles, the AFR for cars with engine sizes between 1,401cc and 2,000cc has been reduced from 15p per mile to 14p per mile.

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Larger petrol vehicles with engines exceeding 2,000cc will also see a penny reduction, with rates dropping from 23p to 22p per mile.

Meanwhile, the rate for smaller petrol cars with engines up to 1,400cc remains unchanged at 12p per mile, HMRC explained.

The tax authority's calculations have been based on current fuel prices of 133.2p per litre for petrol, with the rates reflecting the varying fuel efficiency of different engine sizes.

For diesel vehicles, HMRC has reduced the rate for cars with engines up to 1,600cc from 12p per mile to 11p per mile.

Rates for larger diesel engines remain unchanged, with vehicles between 1,601cc and 2,000cc staying at 13p per mile while the largest diesel engines, those over 2,000cc, continue at 17p per mile.

These diesel rates are calculated based on current fuel prices of 140.1p per litre, with the tax authority taking into account the mean miles per gallon achieved by different engine sizes.

But interestingly, liquefied petroleum gas rates remain unchanged in the latest review, with vehicles up to 1,400cc staying at 11p per mile, those between 1,401cc and 2,000cc at 13p per mile, and larger engines over 2,000cc at 21p per mile.

The advisory electricity rate for fully electric company cars also remains unchanged from the previous announcement at 7p per mile.

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HMRC stated that the current electricity rate is based on an electrical efficiency of 3.57 miles per kilowatt hour and a domestic electricity cost of 25.64p per kilowatt hour.

Hybrid cars continue to be treated as either petrol or diesel cars for advisory fuel rate purposes.

Businesses can use these advisory rates when reimbursing employees for business travel in company cars or when employees need to repay the cost of fuel used for private travel.

HMRC said it specifies that if the mileage rate paid is no higher than the advisory rates for the specific engine size and fuel type, there will be no taxable profit and no Class 1A National Insurance to pay.

Companies with more fuel-efficient vehicles, or where business travel costs exceed the guideline rates, can use their own rates to better reflect their circumstances.

The tax authority emphasised that these rates must not be used in any other circumstances. HMRC reviews the fuel rates quarterly in March, June, September and December.