Advisory fuel rates

Good news for employees reclaiming business travel in company vehicles: HMRC has updated the recommended reimbursement rates.

The new rates

Employers can reimburse employees for the cost of business journeys in their company car at the following mileage rates tax-free, from 1 March 2024:

The above rates only apply to employees using a company car.

The advisory reimbursement rate for fully electric cars will be 9p per mile. Hybrid cars are treated as petrol or diesel cars for advisory fuel rates.

If they use own car for work

The maximum amount that can be reimbursed tax-free is 45p per mile for the first 10,000 miles and 25p per mile thereafter. This amount was last updated in 2011.

An additional 5p per mile can be paid per passenger, as long as the journey is also business travel for the passenger.

They can also claim for other vehicles

The rate for employees using motorcycles is 24p per mile. If they use their bicycle for work, the approved rate is 20p per mile. These amounts have not been updated since at least 2001.

If an employer chooses to make payments in excess of the mileage rates above, to better reflect the costs of running a vehicle, there will be tax complications for the employer and the employee. Get in touch with our experts to find out more.