Diesel business mileage rates
- Effective 1 September
- Cut hits sub 2.0-litre diesel company cars
- 1p rate reduction
DIESEL company car drivers look away now: changes to company car business mileage rates by HMRC are targeting the key 2.0-litre and under sector.
While the business mileage rates, known as advisory fuel rates (AFR), remain unchanged for petrol, LPG and diesel engines larger than 2.0-litre, the reduction in rates, effective from Monday 1 September, for smaller diesel engines will hit a large section of company car diesel users in the UK today.
And likely to be the hardest hit are those company car drivers in the SME small fleet sector, because the majority of their company cars will come from the most frugal and tax-efficient sub 2.0-litre diesel range.
AFR is used to claim back business mileage in company cars or to repay private mileage if fuel is provided by the company so to avoid car fuel benefit tax.
HMRC reviews the AFR every quarter, basing its calculation this time on average fuel prices on 19 August from the Department of Energy and Climate Change and LPG average price quoted on the AA website.
The new company car business mileage rates are listed below.
Petrol: Company car business mileage rates from 01 September 2014
- Engine size 1400cc or less: 14p – unchanged
- 1401cc to 2000cc: 16p – unchanged
- Over 2000cc: 24p – unchanged
Diesel: Company car business mileage rates from 01 September 2014
- Engine size 1600cc or less: 11p – 1p reduction
- 1601cc to 2000cc: 13p – 1p reduction
- Over 2000cc: 17p – unchanged
Hybrid and LPG-fuelled company car business 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.
- Drivers of LPG company cars should use the following rates: Engine size 1400cc or less: 9p –unchanged; 1401cc to 2000cc: 11p – unchanged (LPG); Over 2000cc: 16p – unchanged (LPG)
The AFR business mileage rates are to be used by company car drivers and should should not be confused with Approved Mileage Allowance Payments, known as AMAPs, because these are the tax-free pence-per-mile rates applicable only when drivers use their private cars for business purposes.