New two-tier mileage rates for electric vehicles
The amount that employers can reimburse staff for business travel in company cars changes from 1 September 2025. What are the new rates, and why is this update different to previous ones?
Advisory fuel rates for company cars are updated by HMRC on a quarterly basis due to fluctuations in fuel prices. The rates determine the amount that can be paid to an employee using a company car for business mileage, or where an employee has to reimburse their employer for private journeys. Where HMRC’s rates are used, there are no income tax consequences for the employee. HMRC has now published the advisory rates applicable from 1 September 2025. The rate per mile will be:
| Engine size | Petrol | LPG |
|---|---|---|
| 1,400cc or less | 12p | 11p |
| 1,401cc to 2,000cc | 14p | 13p |
| Over 2,000cc | 22p | 21p |
| Engine size | Diesel |
|---|---|
| 1,600cc or less | 12p |
| 1,601cc to 2,000cc | 13p |
| Over 2,000cc | 18p |
The big difference this time is the introduction of a second electricity rate for fully electric cars. For 1 September, the two rates will be:
- 8 pence per mile for home charging
- 12 pence per mile for public charging
Related Topics
-
Employment Intermediaries quarterly return due
-
Multiple tax-free perks for directors
With Christmas in mind a fellow director has suggested your company uses the trivial benefits in kind exemption to provide £300 of tax and NI-free gifts to each director. You’ve heard about the exemption but can it be used in this way?
-
P46 (car) submission deadline
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.