New Fuel Rates for Company Cars Effective June 1: What You Need to Know
Understanding the New Fuel Rates for Company Cars: What You Need to Know
As of June 1, new fuel rates for company cars will be introduced across the country, covering electric, diesel, hybrid, petrol, and LPG vehicles. These changes will have a significant impact on how employers and employees manage their company car expenses and fuel reimbursements.
Advisory Fuel Rates: A Crucial Tool for Managing Costs
Advisory Fuel Rates play a crucial role in managing the costs associated with company car use. These rates, reviewed quarterly by HMRC, provide a standardized framework for reimbursing employees for business travel or calculating repayments for private fuel use. By aligning with these rates, employers can ensure compliance with tax regulations while effectively managing company car expenses.
Changes Effective from June 1
The updated Advisory Fuel Rates effective from June 1 bring significant changes to fuel reimbursement practices. Petrol cars will now be subject to rates ranging from 14p to 26p per mile, while LPG cars will incur rates between 11p and 21p per mile. Diesel cars will have rates ranging from 13p to 20p per mile, categorized by engine size.
Hybrid vehicles, despite their fuel efficiency and environmental benefits, will still fall under the petrol or diesel advisory rates based on the vehicle’s fuel type and engine size. This ensures consistency and compliance with tax regulations while accommodating the growing popularity of hybrid technology in corporate fleets.
The Transition to Electric Vehicles
Fully electric cars will now be reimbursed at a rate of 8p per mile, a 2p cut from December 2023. This change has raised concerns among drivers that the current Advisory Electric Rate (AER) policy fails to adequately cover all drivers, leaving many out-of-pocket. It is clear that the AER needs significant revisions to ensure fair compensation for everyone affected.
Employers and employees should adapt to these changes and incorporate electric rates into their reimbursement policies to encourage the use of eco-friendly transportation solutions. The transition to electric vehicles is not only beneficial for the environment but also for reducing fuel costs in the long run.
Stay informed about these new fuel rates for company cars and make sure to adjust your reimbursement policies accordingly to stay compliant and cost-effective. For more insights and updates on company car management, visit BigWantsYourCar.com.