HMRC advisory fuel rate for company car users from 1 March 2021

The advisory fuel rates that apply from 1 March 2021 have been increased by 1p per mile for petrol and diesel vehicles to reflect a slight increase in fuel prices. The previous rates, effective December 2020, can be used for up to one month from the date the new rates apply. 

 

The rates only apply in the following circumstances:

  • reimburse employees for business travel in their company cars; or
  • require employees to repay the cost of fuel used for private travel.

 

These rates cannot be used in any other circumstances. If the rates are used, it is not necessary to apply for a dispensation to cover the payments made.

 

When employees are reimbursed for business travel in their company cars, HMRC will accept there is no taxable profit and no Class 1A National Insurance to pay.

 

The advisory electricity rate for fully electric cars is unchanged at 4p per mile. Electricity is not a fuel for car fuel benefit purposes. Hybrid cars are treated as either petrol or diesel for this purpose. 

 

Advisory fuel rates from 1 March 2021

 

Engine size

Petrol - amount per mile

LPG - amount per mile

1400cc or less

10p

7p

1401cc to 2000cc

12p

8p

Over 2000cc

18p

12p

 

Engine size

Diesel - amount per mile

1600cc or less

9p

1601cc to 2000cc

11p

Over 2000cc

12

 

HMRC reviews rates quarterly on 1 March, 1 June, 1 September and 1 December.