Advisory fuel rates are government-set rates to help businesses in reimbursement of fuel costs on company cars.
When employees are reimbursed for fuel costs, the employer is not required to pay Class 1 National Insurance contributions or tax, provided that the mileage rate is no higher than the advisory rate. If the fuel cost per mile is higher than the advisory fuel rate and there is no way to prove this, any excess needs to be treated as taxable profit and earnings for NIC purposes.
Advisory fuel rates apply only if you either:
- reimburse employees for business travel in their company cars
- need employees to repay the cost of fuel used for private travel
The fuel rates are reviewed quarterly by HMRC on the 1st of March, June, September and December.
You can check the current advisory fuel rates on the HMRC webpage.
