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Fuel Charges and Rates

Explanation for company car drivers claiming back fuel costs from their employer.

The Government fuel scale charge for calculating the tax due on employer-provided ‘free’ fuel for private use in a company car rises to £27,800 in tax year 23/24.

If your employer provides fuel for your private use this is a benefit to you and you will incur a tax charge.

This is calculated by multiplying £27,800 (a set amount irrespective of car driven) by the same % derived from the CO2 of your car. For example, a petrol car with CO2 emissions of 99 g/km has a tax charge of 24%. The fuel scale charge is £27,800 x 24% = £6,672, equating to annual fuel tax liability of £1,334 for a 20% tax payer, or £2,668.80 for a 40% tax payer.

If an employee reinburses their employer for private fuel they do not then pay the Benefit In Kind (BIK) Fuel Charge. The table below shows the Government Advisory Fuel Rates (AFR). The AFR should be used to calculate the amount to reimburse an employer for private fuel. Equally an employee can purchase all of the fuel used in their company car and use the AFR to calculate how much they should claim back from their employee for business mileage.

Advisory Fuel Rates

These rates apply from 1 December 2024. You can use the previous rates for up to one month from the date the new rates apply.

Engine size Petrol – Amount per mile LPG – Amount per mile Engine size Diesel – Amount per mile
1400cc or less 12 pence 11 pence 1600cc or less 11 pence
1401cc to 2000cc 14 pence 13 pence 1601cc to 2000cc 13 pence
Over 2000cc 23 pence 21 pence Over 2000cc 17 pence

Advisory electricity company car mileage rate for fully electric cars is 8p per mile from June 1 2024.

Hybrid powered company car mileage rates

  • Drivers of petrol/electric hybrid company cars should use the petrol rates.
  • Drivers of diesel/electric hybrid cars should use the diesel rates.

These rates are only applicable to employees using a company car.

Mileage Allowance Payments

Mileage Allowance Payments (MAPs) are what you pay your employee for using their own vehicle for business journeys.

You’re allowed to pay your employee a certain amount of MAPs each year without having to report them to HMRC. This is called an ‘approved amount’.

Tax: rates per business mile

First 10,000 miles Above 10,000 miles
Cars and vans 45p (40p before 2011 to 2012) 25p
Motorcycles 24p 24p
Bikes 20p 20p

Example

Your employee travels 12,000 business miles in their car – the approved amount for the year would be £5,000 (10,000 x 45p plus 2,000 x 25p).

It does not matter if your employee uses more than one vehicle in a year – it’s all calculated together.

Benefits of Business Car Leasing

Minimum capital expenditure

Accurate monthly budgeting

Improved cash flow

Fixed interest rates

Rentals can be offset against the businesses profits.

Reduced administration

On-going advice and support

Road Fund Licence provided (vehicle excise duty paid) for duration of contract

Optional maintenance package

Optional breakdown rescue cover

Optional replacement vehicle cover in event of breakdown

Optional GAP insurance which provides cover for the shortfall between the outstanding finance and the insurance value if the vehicle is declared a write-off by your insurance company

Disadvantages

Early termination can be expensive

If you do more miles than stated in your contract you will be charged excess mileage for each mile over that stated in your contract

You must look after the vehicle and return it in a well maintained condition otherwise you will be charged for any damage over and above that stated in the ‘Fair Wear and Tear Guide’

You must have fully comprehensive vehicle insurance

We are Balgores, based in Romford, Essex. Our team of experts have worked in the car leasing sector for decades, building relationships with manufacturers across the globe to provide drivers with incredible leasing offers on any and every car.