Mileage rates for petrol and diesel cars have increased from 01 September 2021, employers have been reminded.
The new rates only apply to employees using a company car, rather than their own vehicle.
If you need to reimburse staff for business travel, here’s what you need to know.
What are mileage rates?
Mileage rates – also known as fuel rates – are used to calculate how much employees should be reimbursed for business travel in company cars, or how much employees need to repay when using fuel for private travel.
If the mileage rate paid is no higher than the advisory fuel rates for the engine size and fuel type of the company car, there will be no taxable profit and no Class 1A National Insurance to pay.
What are the new mileage rates?
From 01 September 2021, the mileage rates are as follows:
Petrol
| Engine size (cc) | Rate per mile | Advisory fuel rate | ||||
| Up to 1400 | 11.6 pence | 12 pence | ||||
| 1401 to 2000 | 13.6 pence | 14 pence | ||||
| Over 2000 | 20.4 pence | 20 pence |
Diesel
| Engine size (cc) | Rate per mile | Advisory fuel rate | ||||
| Up to 1600 | 9.8 pence | 10 pence | ||||
| 1601 to 2000 | 12.1 pence | 12 pence | ||||
| Over 2000 | 14.8 pence | 15 pence |
Liquefied petroleum gas (LPG)
| Engine size (cc) | Rate per mile | Advisory fuel rate | ||||
| Up to 1400 | 6.8 pence | 7 pence | ||||
| 1401 to 2000 | 8.0 pence | 8 pence | ||||
| Over 2000 | 12.0 pence | 12 pence |
FAQ
What is the difference between the rate per mile and the advisory fuel rate?
The advisory fuel rate is rounded up or down to the nearest whole number for accounting purposes.
Can I use a lower mileage rate?
Yes, but only where a company car is proven to be more fuel-efficient than the advisory fuel rate suggests.
Can I use a higher milage rate?
Yes, but only where it can be demonstrated that the cost per mile was higher than the guideline rate.
Get advice today
For help and advice with related matters, please get in touch with our accounting team today.