Business mileage and how to pay it

HMRC reviews the advisory fuel rates each quarter on the first day of March, June, September and December. You can use the previous rates for up to one month from the date any new rates apply. 

 

The figures use manufacturers’ information and take into account annual fleet sales to businesses. The advisory rate for fully electric cars is based on government information and annual electric car sales to businesses. 

 

For hybrid cars you should use either the petrol or diesel rate. 

 

Employees don’t pay any fuel benefit charge if their private mileage in a company car is recorded and repaid at the advisory rate or higher. You don’t have to use the advisory rate if employees repay all their private fuel costs at a lower rate. 

 

Advisory rates for employees to repay for private use of their company cars: 

If your business doesn’t pay for any company car fuel the amounts reimbursed for business journeys aren’t taxable for employees. 

 

For employees using their own cars for business purposes the tax-free Advisory Mileage Allowance Payment (AMAP) hasn’t changed. Employees can claim 45p per mile plus 5p per passenger for the first 10,000 business miles. After 10,000 miles the rate goes down to 25p per mile. 

 

Input VAT. The 45p and 25p payments include the advisory fuel rates. As an employer you can reclaim 20/120 of the amount as input VAT. To do this you must have a VAT invoice from the filling station. So, for example, for a 2000cc diesel engine car you could reclaim 3p per mile input VAT (18p x 20/120).