TT145: Company Car Fuel Update

January 22, 2010

Mileage rates from 1 December 2009:

In TT140 we reported on the new rates to be used for paying the fuel-only element to employees who claim for business miles driven in company cars. (Remember, this applies only when the employee with a company car pays for all their fuel and claims back only the business element).

The rates stated in that issue of Topical Tips should be used from 1 July 2009. However, from 1 December 2009 the rates have been altered as shown below.

The rates have previously been announced with one month’s warning and the option for employers to adopt early, but earlier this year it was announced that the additional month’s warning would no longer be provided, and that employers should adopt the revised rates immediately

Advisory Fuel Rates

Engine size Petrol Diesel LPG
1,400cc or less 11p 11p 7p
1,401cc to 2,000cc 14p 11p 8p
Over 2,000cc 20p 14p 12p

You should update your systems to match the new rates or you might inadvertently pay employees the wrong amount and create a tax and National Insurance bill for the company.

Future changes:

HMRC will consider changing the rates if fuel prices fluctuate by 5 per cent from the published rates when each review is made and where they consider the price change will be sustained.

Employers can check this at:

The next potential review of these figures will be from 1 July 2010.

Barnes Roffe Topical Tips

  • Please refer to TT127 and consider reviewing all staff’s company car benefit to see if the fuel benefit is worth it – often scrapping it could benefit both you and your employees!
  • Ensure you update the above rates to avoid underpaying staff the highest potential tax-free amount for their business mileage, or to avoid overpaying staff and creating an unexpected tax and National Insurance bill for the company.
  • If in doubt then please speak to your Barnes Roffe LLP partner for guidance.
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