HMRC have recently released the latest advisory fuel rates that come into effect from 1 September 2021.
These rates apply to employees using Company cars on business journeys.
There are a number of changes covering petrol, LPG and diesel engine vehicles.
Petrol
- The 1400cc or less rate has increased by 1p from 11p per mile to 12p per mile
- The 1401cc to 2000cc rate has increased by 1p from 13p to 14p per mile
- The over 2000cc rate has increased by 1p from 19p to 20p
LPG
- The 1400cc or less rate has decreased by 1p from 8p per mile to 7p per mile
- The 1401cc to 2000cc rate has decreased by 1p from 9p per mile to 8p per mile
- The over 2000cc rate has decreased by 2p from 14p per mile to 12p per mile
Diesel engine
- The 1600cc or less rate has increased by 1p from 9p to 10p
- The 1601cc to 2000cc rate has increased by 1p from 11p to 12p
- The over 2000cc rate has increased by 2p from 13p per mile to 15p per mile
HMRC have also confirmed that the Advisory Electricity Rate for fully electric cars remains at 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.
The link to the new rates is here for your information.
It is important to ensure that employees are paid within the HMRC rates to avoid a tax charge arising. During an employer compliance inspection one of the key checks made by HMRC relates to claims made relating to business travelled, both in company cars and employees’ own vehicles, and HMRC make a significant amount of recoveries from employers in respect of excess rate payments.
If you would like any help in understanding how Smith Cooper can help you to minimise your risks of underpaid tax and NIC arising during HMRC Compliance Inspections, please contact our Employment Tax team.