New mileage rates

The price of road fuel has increased significantly in the last few months and HMRC has responded by raising all of the advisory fuel mileage rates for company cars from 1 December 2021.
Where the employee pays for the fuel in their company car, they can now be paid the following business mileage rates tax-free:
• 13p for petrol vehicle under 1400cc
• 15p for petrol vehicle from 1401 to 2000cc
• 22p for petrol vehicle over 2000cc.

The equivalent mileage rates for diesel vehicles are: 11p, 13p and 16p

The advisory mileage rate for electric company vehicles has also increased from 4p per mile to 5p per mile. This is a significant 25% uplift, and the first change in the rate since it was introduced in 2018. However, it is definitely needed, as the cost of electricity has also increased dramatically recently.

The provision of an electric vehicle (car or van) to an employee or director is still very tax-efficient. Although the taxable benefit for electric cars is due to double from 1% to 2% of list price on 6 April 2022, it will be frozen at that level until at least 6 April 2025.

There is currently zero taxable benefit for using an electric company van for private journeys.