The table below sets out the HMRC advisory fuel rates from 1 June 2023. These are the suggested reimbursement rates for employees’ private mileage using their company car. Where the employer does not pay for any fuel for the company car these are the amounts that can be reimbursed in respect of business journeys without the amount being taxable on the employee.
|1400cc or less||13p||10p|
|1600cc or less||12p
|1401cc to 2000cc||15p||12p
|1601 to 2000cc||14p
Where there has been a change, the previous rate is shown in brackets.
You can also continue to use the previous rates for up to 1 month from the date the new rates apply. Note that for hybrid cars you must use the petrol or diesel rate. For fully electric vehicles the rate is 9p (8p) per mile.
Use of HMRC advisory rates for vat purposes
Where employers reimburse their employees for using their own cars for business journeys the tax – free reimbursement rate continues to be 45p for the first 10,000 business miles and 25p a mile thereafter. There is also an additional 5p per mile per passenger. These rates have not increased for about 10 years!
Provided the employee provides a fuel receipt from the filling station the employer is able to reclaim input VAT on a portion of the amount reimbursed to the employee. The input VAT is 1/6th of the advisory fuel rate for the employee’s vehicle. For a 2200cc diesel car the input VAT would be 3.3p per mile based on 20p.