Where employees undertake business-related mileage in a company owned car, HMRC allows the employer to repay them at a pre-approved rate per mile. As long as the amount paid doesn’t exceed this, no taxable benefit arises and there is no Class 1A NI charge. The rates are based on calculations made using actual pump price data, so naturally need to be reviewed periodically, quarterly in fact. They differ for petrol and diesel cars, as well as LPG fuel. When new rates are announced, the employer can continue to use the previous quarter’s rates for up to one month.

The rates that apply from 1 December 2021 are now available and, as expected, these have all increased slightly due to the recent increase in fuel costs. The latest rates are as follows:

Petrol and LPG

Engine capacity	Petrol	LPG
<1,400cc	13p	9p
1,401cc - 2,000cc	15p	10p
2,000cc>	22p	15p

 

Diesel

Engine capacity	Diesel
<1,600cc	11p
1,601cc - 2,000cc	13p
2,000cc>	16p