If your business involves reimbursing employees for fuel used during business travel or requires employees to repay fuel costs for personal mileage, it’s essential to stay informed about HMRC’s advisory fuel rates.  

These rates, which are updated every three months, have seen a reduction as of 1 September 2024 for petrol, diesel, and electric vehicles.  

With the latest reductions, businesses now have an opportunity to lower their fuel reimbursement expenses, which can lead to long-term savings, particularly for companies with a fleet of vehicles. 

By following these rates, businesses avoid complex tax obligations, including any liability for Class 1A National Insurance contributions or taxable profits. 

New fuel rates from 1 September 2024 

From 1 September 2024, the following fuel rates apply: 

Petrol: 

• 1400cc or less – 13p per mile (previously 14p) 

• 1401cc to 2000cc: – 15p per mile (previously 16p) 

• Over 2000cc – 24p per mile (previously 26p) 

Diesel: 

• Up to 1600cc – 12p per mile (previously 13p) 

• 1601cc to 2000cc – 14p per mile (previously 15p) 

• Over 2000cc – 18p per mile (previously 20p) 

Electric: 

• All electric cars: 7p per mile (previously 8p) 

Hybrid vehicles are categorised based on their primary fuel source (either petrol or diesel). 

How could your business benefit? 

Although the reductions may appear small, businesses with a significant number of company cars or employees travelling extensively for work will notice considerable savings over time.  

The cut in reimbursement rates – ranging from 1p to 2p per mile, could lower overall fuel reimbursement expenses, freeing up resources for other areas of your business. 

Remaining in line with the updated rates ensures that businesses stay compliant with tax regulations and avoid unexpected tax liabilities.  

The reduction in the electric vehicle reimbursement rate to 7p per mile is particularly relevant for businesses adopting eco-friendly practices.  

With the growing push towards electric vehicles, this lower rate offers a more cost-effective solution for businesses reimbursing employees who drive electric company cars. 

Flexibility during the transition 

For businesses concerned about the immediate impact of the rate changes, HMRC offers a transitional period.  

Until the end of September 2024, companies can continue using the June 2024 rates.  

This provides flexibility, especially for those who have already processed reimbursements or repayments under the previous rates. 

For further information or advice about the fuel rate changes, contact us today.