Employee expense management is about people and money, not software. A working process has to reimburse accurately and quickly, keep the employer compliant with HMRC, produce evidence that survives an audit, and control spend without policing anyone. Those four pull against each other. With an expense process health check that scores all four separately, and a table of employer obligations by expense type with the HMRC reference for each.
Most expense software checklists are prose with the word checklist in the title. This one is a scoring instrument: 46 criteria across eight themes, weighted to your headcount, entities, VAT status, mileage, cards and sector, scored per vendor on a scale where the top mark is demonstrated on screen rather than claimed. It outputs a weighted score, a per theme comparison, a gap list phrased as risk and a demo question list built from everything still unproven. Plus ten UK compliance tests with the HMRC rule behind each, nine pieces of security evidence to demand, and the exit and data portability questions nobody else writes about.
UK expense software is priced six ways and published rates run from £1.48 to £21 a user a month. Here is what each model actually bills, where the extras hide, and the number a finance director should be asking for instead.
Most guides answer this with ten benefits. This one gives you the numbers at which a manual expense process actually breaks, an interactive test that scores your own process, and an honest verdict band that tells you when the answer is not yet.
Most guides stop at “take a photo and click approve”. This one covers the rest: how approval routing is configured, what happens when a card transaction has no receipt, the VAT evidence HMRC actually requires, and what one claim becomes in your general ledger. Includes an interactive claim lifecycle walkthrough across five claim types.
A UK explainer on expense management software: what it does, how it works, the HMRC rules it has to satisfy in 2026-27, and a free fit check that tells you whether you need it at all.
From 6 April 2027, payrolling certain benefits in kind becomes mandatory, phased in over two stages—phase 1 covers company cars, fuel, vans, and medical benefits, with most others following in April 2028.
If you’ve been keeping an eye on HMRC’s plans for benefits in kind (BiKs), you’ll know change is coming within the next year. The headline is simple: payrolling biks is becoming mandatory for certain benefits. But, it’s the detail that finance teams need to pay attention to because the timeline has shifted, and the way you record and report expenses will need to change accordingly.
This is a straightforward rundown of what’s changing and when.
Payrolling a benefit means you report the Income Tax due on it in real time, through payroll, rather than tidying it all up at year’s end through a P11D. For benefits like company cars or private medical cover, that tax gets spread across the year and collected as you go.
Following industry feedback, HMRC has confirmed a phased introduction rather than a single switchover. Mandatory real-time reporting of Income Tax and Class 1A National Insurance contributions for certain benefits in kind and taxable expenses will now be phased in, with phase 1 commencing from 6 April 2027 and phase 2 from 6 April 2028.
From 6 April 2027, mandatory payrolling will cover company cars, car fuel, vans, van fuel, and employer-provided medical benefits. Phase 2 brings in most other benefits from April 2028, excluding loans and accommodation, which remain voluntary.
| Phase | Starts | Benefits covered |
| Phase 1 | 6 April 2027 | Company cars, car fuel, vans, van fuel, employer-provided medical benefits |
| Phase 2 | 6 April 2028 | Most remaining BiKs (loans and accommodation stay voluntary) |
The good news is that the phased rollout gives you extra time to prepare. However, don’t assume 2027 means you can wait; adjusting payroll systems takes planning, and implementation work typically begins well in advance.
Payrolling BiKs isn’t only a payroll job, it leans heavily on the quality of your expense and benefit records. If your data is messy, real-time reporting will expose it fast.
HMRC is also tidying up the technical side. Draft data item guidance is being provided that reflects the removal of real-time information (RTI) data fields for BiKs. The technical specifications for developers will be updated to align with the revised data requirements from April 2027. In short, the way benefit data flows into payroll is being rebuilt, and your software will need to keep up with the pace.
A lot of finance managers don’t realise how much manual reconciliation is behind their current P11D process until they try doing it monthly instead of annually. Is your organisation still juggling benefit and expense data across separate tools? If so, now’s a sensible time to start closing those gaps.
Take HTS Group, for example. Their finance team was losing up to two days every month to manual reimbursements and reconciliations, with month-end closures constantly slipping.
After moving to Capture Expense—integrated directly with their Cintra People payroll and Sage 50—monthly expense processing dropped from a day and a half to an hour and a half, alongside an 87% reduction in errors. That’s the kind of clean, connected data that makes real-time reporting straightforward rather than stressful.
Read the full story here.
The 2027 deadline feels distant, but the organisations that handle this well will be the ones that tidied their data early rather than scrambling at year’s end. Real-time reporting rewards clean, connected data—and that’s exactly what good expense management gives you.
Capture Expense keeps spend, mileage, and reimbursement records in one place, with integrations that sync directly into your payroll and accounting systems; vehicle mileage tracking and card reconciliation that keep the underlying data accurate before it reaches payroll; and expense reporting that helps finance teams spot issues early. All of which matters when fuel and vehicle benefits are in scope for phase 1.
It’s worth checking the official details in HMRC’s interim guidance on payrolling biks, which will be regularly updated. Further technical guidance is expected by July 2026, with final phase 1 guidance aligned to the Autumn Budget 2026. Begin with your phase 1 benefits, check your records, and make sure your systems are ready to report in real time.
If you’d like to see how Capture Expense keeps your expense and benefit data clean and connected ahead of the change, we’d be happy to walk you through a demo.
The information you need to make sure your business complies with HMRC guidelines across policies, tax, reporting, allowances, and more—bridging the gap between in-depth explainers and those that lack the extra context you need!
HMRC has updated its advisory fuel rates (AFRs) for company cars, effective 1 June 2026—the second of four scheduled changes to HMRC advisory fuel rates in 2026. If your organisation reimburses employees for business travel in company cars—or asks employees to repay the cost of private fuel—these changes apply to you.
The good news is that most of the changes are upward adjustments, which means reimbursing at the right rate just got a little clearer. But, if you’re still updating mileage rates manually or relying on spreadsheets, there’s a decent chance the wrong figures are already sitting in your process.
Let’s walk through exactly what’s changed, why it matters, and what you should do next.
Advisory fuel rates are the rates published by HM Revenue & Customs (HMRC) that employers can use when reimbursing employees who use a company car for business travel. They’re also used when an employee needs to repay their employer for the cost of fuel used on private journeys.
These aren’t just helpful guidelines; they have real tax implications.
If you reimburse employees at or below the advisory fuel rate for their car’s engine size and fuel type, there’s no taxable profit and no Class 1A National Insurance (NI) to pay on those payments. Pay above the rate without evidence to justify it, and you may need to treat the excess as taxable earnings. That means extra admin, and potentially extra cost.
There are two things worth knowing here:
The new rates reflect updated petrol, diesel, liquefied petroleum gas (LPG), and electricity prices. HMRC reviews AFRs quarterly (on 1 March, 1 June, 1 September, and 1 December each year) using fuel price data from the Department for Energy Security and Net Zero (DESNZ) and the AA. You can view the full published rates on the HMRC advisory fuel rates guidance page.
The petrol rates have seen a notable increase from the previous quarter, particularly for larger engines.
| Engine size | Petrol: rate per mile | LPG: rate per mile |
| 1400cc or less | 14p | 11p |
| 1401cc to 2000cc | 17p | 13p |
| Over 2000cc | 26p | 21p |
For comparison, the rates from 1 March to 31 May 2026 were 12p, 14p, and 22p for petrol. That’s a meaningful jump, especially for larger-engined vehicles, where the petrol rate has risen by 4p per mile.
Diesel rates have also increased substantially this quarter.
| Engine size | Diesel: rate per mile |
| 1600cc or less | 15p |
| 1601cc to 2000cc | 17p |
| Over 2000cc | 23p |
The previous diesel rates were 12p, 13p, and 18p respectively. For a fleet of vehicles travelling a significant number of miles each month, this kind of change compounds quickly.
The advisory electric rates remain split between home and public charging—a distinction that was introduced in September 2025.
| Charging location | Electric: rate per mile |
| Home charger | 7p |
| Public charger | 15p |
The home charging rate holds at 7p and the public charging rate stays at 15p, consistent with the previous quarter.
For hybrid vehicles, HMRC treats them as either petrol or diesel for the purposes of advisory fuel rates, so make sure you use the relevant fuel type table.
For fully electric cars charged at both home and public locations, HMRC allows you to apportion the mileage based on how much charging happens at each place. The split must be fair and reasonable, and you’ll need to be able to demonstrate it if asked.
Imagine someone drives 800 miles in a month. They charge 70% at home and 30% using public chargers. You’d apply 7p per mile to 560 miles and 15p per mile to 240 miles. That gives a total reimbursement of £75.20.
This is a lot simpler to handle when your mileage tracking system automatically logs journey types and charging locations, rather than asking employees to calculate it themselves.
Source EV manages a fleet of EVs across the UK and Ireland, and for their HR & Finance Business Partner Lauren Miles, mileage reimbursement was one of the most time-consuming parts of the job. With employees charging at home, at public hubs, and sometimes both on the same journey, claims involved multiple rates and a significant amount of manual checking to get right.
“The chasing, the checking, the back-and-forth, it just isn’t there anymore,” says Lauren. Since moving to Capture Expense, expense processing has dropped from the better part of a day to around an hour—and mileage rates update automatically, without Lauren’s team having to intervene each time HMRC publishes new figures.
This may feel obvious, but it’s worth stating! If you’re using a fixed rate in a spreadsheet, payroll process, or expense policy, it needs updating now (or by 30 June 2026 at the latest).
Ask yourself: do you currently have a process for updating mileage rates when HMRC publishes new figures? If the answer is “someone does it manually, eventually”, it’s a compliance risk worth resolving before the next quarterly update
Your expense policy should reference HMRC’s advisory fuel rates rather than hardcoded figures. That way, when rates change quarterly, you’re updating one reference point rather than hunting down every place a rate appears.
It sounds simple, but employees using company cars for business travel need to know what rate applies to their vehicle. That means communicating the change clearly and, ideally, having a system that applies the right rate automatically at the point of claim.
Overpaying without evidence of higher costs means treating the excess as taxable income. Underpaying means employees aren’t properly covered for their fuel costs—which affects morale and may not meet your contractual obligations.
Getting this right isn’t complicated, but it does require accurate, current information at the point of reimbursement.
HMRC advisory fuel rates will change again in 2026—on 1 September, then 1 December. And so on.
If your current process relies on someone manually spotting the HMRC update and updating it through your systems, you’re creating four opportunities each year for the wrong rate to be used. That’s manageable when you have a small fleet, but as your organisation grows it becomes a real compliance risk.
The most reliable approach is to have your expense management software do the heavy lifting, so rate changes don’t depend on someone remembering.
If you’d like to see how Capture Expense can take the quarterly rate update off your to-do list—and give your finance team a cleaner, more accurate mileage process—book a demo with our team.
All advisory fuel rates referenced in this article are sourced from HMRC’s official advisory fuel rates guidance, last updated 22 May 2026.
The information you need to make sure your business complies with HMRC guidelines across policies, tax, reporting, allowances, and more—bridging the gap between in-depth explainers and those that lack the extra context you need!
HMRC reviews advisory fuel rates quarterly: on 1 March, 1 June, 1 September, and 1 December each year. Rates are based on fuel price data from the Department for Energy Security and Net Zero (DESNZ) and the AA. The next change will be 1 September 2026.
Petrol and LPG: Engines of 1400cc or less are reimbursed at 14p per mile (11p for LPG). For 1401cc to 2000cc, the rate is 17p (13p LPG). Engines over 2000cc are reimbursed at 26p per mile (21p LPG).
Diesel: Engines of 1600cc or less are reimbursed at 15p per mile. The 1601cc to 2000cc band is 17p, and engines over 2000cc are reimbursed at 23p per mile.
Electric: Vehicles charged at home are reimbursed at 7p per mile. For public charging, the rate is 15p per mile.
Yes—if your vehicles are genuinely more fuel-efficient or have higher running costs than the HMRC benchmark, you can use your own rates. You must be able to demonstrate this if HMRC asks, so keep supporting evidence on file.
Since September 2025, HMRC has split the electric rate depending on where the vehicle is charged: 7p per mile for home charging and 15p per mile for public charging. You apportion mileage between the two rates based on a fair and reasonable split, and you need to be able to evidence that split.
It was announced in May 2026 that the Approved Mileage Allowance Payment (AMAP) rate will increase to 55p per mile for the first 10,000 business miles in a tax year for cars and vans. The 22% increase marks the end of a 15-year freeze, and should be backdated to any applicable travel from 6 April 2026 (the start of the 2026–27 tax year).
HMRC mileage rates for 2026/27 are 55p per mile for the first 10,000 business miles and 25p per mile thereafter for cars and vans.
Mileage Allowance Payments (MAPs) are the amounts you can pay employees, tax-free, when they use their own vehicles for business travel. Rather than reimbursing individual costs like fuel, insurance, or wear and tear separately, HMRC sets a flat pence-per-mile rate that covers it all in one go.
These are also known as Approved Mileage Allowance Payments (AMAPs). As long as you pay at or below the approved rate, there’s nothing to report to HMRC and nothing to tax. Simple, in principle.
A lot of organisations don’t realise that underpaying employees—say, reimbursing at 30p per mile rather than the approved 55p—means employees can claim the shortfall back themselves through Mileage Allowance Relief (MAR). That’s an admin burden you’re quietly pushing onto your finance team, all for the sake of a few pence.
Overpaying, on the other hand? Any amount above the approved rate is treated as a taxable benefit, meaning that it needs to go on a P11D form (or through payroll), and attracts National Insurance contributions. So, it’s worth getting this right.
Here are the current rates from 6 April 2026 to 5 April 2027:
| Type of vehicle | First 10,000 miles | Over 10,000 miles |
| Cars and vans | 55p per mile | 25p per mile |
| Motorcycles | 24p per mile | 24p per mile |
| Bicycles | 20p per mile | 20p per mile |
The two-tier AMAP structure means the rate drops from 55p to 25p per mile once an employee crosses 10,000 cumulative business miles in a tax year.
One quick note: if an employee carries a work colleague in their own vehicle, they can also claim an extra 5p per mile per passenger on top of the standard rate. That’s worth flagging to any employees who regularly car-share for client visits or site travel.
It’s straightforward. Multiply the miles driven by the relevant rate, applying the two-tier structure for cars and vans once the 10,000-mile threshold is crossed.
For example: an employee drives 14,000 business miles in their own car over the year. Their reimbursement would be:
This works well when employees drive a moderate amount. But be aware that for high-mileage employees—those covering hundreds of miles a week—the 25p rate after 10,000 miles may not cover their actual running costs, particularly with fuel prices currently elevated. It’s worth having a conversation about whether your internal policy needs to reflect this.
The approved rate for cars and vans is 55p per mile for the first 10,000 business miles, then 25p per mile for everything after that. This applies regardless of the engine size, fuel type, or age of the vehicle.
Importantly, this includes hybrid cars, too. They follow the same 55p/25p structure as petrol and diesel vehicles. So, whether your employee drives a Toyota Prius or a Ford Focus, the rate is the same.
What about electric vehicles? For employees using their own electric cars for business, the standard AMAP rate of 55p/25p still applies—there’s no separate rate for personally-owned EVs. This is one area where HMRC’s rates are under some scrutiny, since the running costs of EVs are quite different from petrol or diesel vehicles. For now, though, the same rates apply.
Let’s put this into practice with an example:
Clara works in field sales and uses her own hybrid hatchback for client visits. She logs 11,500 business miles in 2026/27. As her employer, you would reimburse her 10,000 × 55p = £5,500, plus 1,500 × 25p = £375. That’s a total of £5,875. All tax-free!
Employees using their own motorcycles for business can claim 24p per mile. Unlike cars and vans, there’s no two-tier system. The 24p rate applies regardless of how many miles are driven. There’s no 10,000-mile threshold to manage.
For example, if an employee travels 6,000 business miles on their motorcycle, that’s 6,000 × 24p = £1,440 in tax-free reimbursement.
Yes, cycling for work counts too. The approved rate is 20p per mile, with no mileage limit. It covers things like maintenance, insurance, and general wear and tear. It might sound small, but for employees who regularly cycle between sites or to client meetings, it adds up—and it’s a great incentive to encourage greener travel habits across your organisation.
This is where a lot of organisations—and employees—get caught out. Not every work-related journey qualifies for mileage reimbursement.
Journeys that do qualify:
Journeys that don’t qualify:
Commute errors are a common mistake, and one that HMRC takes seriously. The key distinction is “temporary workplace” versus “permanent workplace”—and HMRC has detailed guidance on this.
One thing to keep in mind:
The only tax-free method for reimbursing business miles is through the approved mileage allowance. If you give an employee a cash allowance or pay for their fuel directly, that arrangement will be taxed differently. Parking charges and tolls while using a company vehicle are also a separate matter; they’re covered under subsistence, not the mileage allowance.
If your organisation provides company cars or vans, different rules apply. Employees using a company vehicle don’t qualify for the AMAP rates above—instead, you’ll be working with Advisory Fuel Rates (AFRs) and benefit-in-kind charges.
Here’s what’s changed for 2026/27, as confirmed in the Autumn Budget 2025 and on GOV.UK:
| Charge | 2025/26 | 2026/27 | Increase |
| Van benefit charge | £4,020 | £4,170 | +£150 |
| Van fuel benefit charge | £769 | £798 | +£29 |
| Car fuel benefit multiplier | £28,200 | £29,200 | +£1,000 |
These increases are in line with inflation (based on the September 2025 Consumer Price Index figure). It’s worth updating your payroll system to reflect the new figures before the start of the tax year—see our guide to company car and fuel benefit rates for more detail on how these charges are calculated.
Zero-emission vans still attract a nil rate of tax under the van benefit charge—so if your fleet includes any fully electric vans, those employees won’t face a taxable benefit.
AMAP rates (personal vehicles) vs. Advisory Fuel Rates (company cars)—what’s the difference?
AMAP rates and Advisory Fuel Rates are the two HMRC frameworks that govern how mileage reimbursements are calculated, depending on whether an employee is driving their own vehicle or a company car. Understanding the difference matters when submitting or approving expense claims, as the rates, what they cover, and how they’re applied vary significantly between the two.
The key distinction is that AMAP rates apply when an employee uses their own vehicle, covering all associated running costs, while Advisory Fuel Rates apply to company cars and cover fuel only. This reflects who has the broader costs of the vehicle—the employee in the first case, the employer in the second.
Advisory Fuel Rates (AFRs) are separate from the AMAP rates and apply specifically to company-owned vehicles. They’re used for two purposes:
HMRC reviews these rates quarterly—usually on 1 March, 1 June, 1 September, and 1 December. Employers can use the previous rates for up to one month after a new set comes into effect, so you do get a short transition window.
Here are the rates effective from 1 June 2026 set by the government:
| Engine size | Advisory fuel rate |
| Up to 1,400cc | 14p per mile |
| 1,401cc to 2,000cc | 17p per mile |
| Over 2,000cc | 26p per mile |
| Engine size | Advisory fuel rate |
| Up to 1,600cc | 15p per mile |
| 1,601cc to 2,000cc | 17p per mile |
| Over 2,000cc | 23p per mile |
(Rates reduced from previous quarter from 1 March 2026)
| Engine size | Advisory fuel rate |
| Up to 1,400cc | 11p per mile |
| 1,401cc to 2,000cc | 13p per mile |
| Over 2,000cc | 21p per mile |
The Advisory Electric Rate (AER) is a guideline set by HMRC for reimbursing employees that use electric vehicles (EVs) for business travel. It’s designed to reflect he costs of charging the vehicles and has been split into two categories based on the charging type.
For 2026/27, these are:
| Charging type | Rate |
| Home charging | 7p per mile |
| Public charging | 15p per mile |
The public charging rate increased from 14p to 15p in the March 2026 update, reflecting higher public charging costs. If employees charge their company EVs across both home and public chargers, you’ll need to apportion the mileage accordingly. For VAT purposes, electricity isn’t treated as a fuel for car fuel benefit charges—so fully electric company cars don’t attract the car fuel benefit charge at all.
Hybrid vehicles are treated as either petrol or diesel for AFR purposes, depending on their engine type.
Even organisations with good intentions run into issues with mileage. Here are the most common ones to keep on your radar:
If you’re still relying on spreadsheets or paper forms, it might be time to reconsider. Our guide to how mileage reimbursement works covers the process end-to-end.
For most organisations, mileage payments within the approved rates don’t need to be reported at all. But there are situations where reporting is required:
You can read more about the P11D reporting process and payrolling benefits in kind in our payroll compliance resources at Cintra.
Tracking mileage manually—across multiple employees, multiple vehicle types, and a 10,000-mile cumulative threshold—can get complicated quickly. The risk of errors, missed thresholds, or inadequate records is real, and the consequences of getting it wrong (whether that’s a tax charge or a failed HMRC compliance check) aren’t worth it.
Capture Expense automatically calculates mileage based on journey data and HMRC-approved rates. It tracks cumulative mileage across the year, switches rates automatically at the 10,000-mile threshold, supports multiple vehicle types, and keeps a clean audit trail of every claim—ready if HMRC ever asks to see it.
You can also track carbon emissions alongside mileage, which is increasingly useful for organisations with sustainability reporting requirements. Find out more about tracking CO2 and mileage data together. And if your teams are managing broader expense policies alongside mileage, our expense compliance guide covers everything in one place.
The information you need to make sure your business complies with HMRC guidelines across policies, tax, reporting, allowances, and more—bridging the gap between in-depth explainers and those that lack the extra context you need!
The approved rates are 55p per mile for the first 10,000 business miles in a car or van, dropping to 25p after that. Motorcycles are reimbursed at 24p per mile and bicycles at 20p, with no threshold for either.
Yes they have. The mileage rate for the first 10,000 miles driven in a tax year has increased to 55p. The rate is an increase from the previous 45p per mile.
Yes. Employees using their own electric or hybrid car for business travel follow the same 55p/25p structure as petrol and diesel vehicles. There is no separate AMAP rate for personally-owned EVs.
No. Travel between home and a permanent workplace doesn’t qualify. Eligible journeys include visiting clients, travelling between work locations, or attending a temporary workplace.
A new tax year is around the corner, and if you provide company vehicles for personal use, now is the time to get up to speed with car fuel benefits. The 2026/27 tax year brings updated rates, revised reporting requirements, and additional changes that employers need to know.
We’ve put together everything you need to know about the 2026/27 car fuel benefit charge—from what it is, to the latest rates, and how to report to HMRC. It’s time to get into gear!
The car fuel benefit applies to UK taxpayers who use their company car for personal journeys and don’t pay for the fuel themselves. This applies to regular commuting too, it’s not just leisure trips that fall under company car fuel benefits.
Following the 2025 Budget, several company car and van fuel benefit charges have been updated in line with the September 2025 Consumer Price Index (CPI):
Here’s what that looks like for 2026/27:
| Charge | Rate |
| Van benefit charge | £4,170 |
| Van fuel benefit charge | £798 |
| Car fuel benefit charge multiplier | £29,200 |
The rates below apply from 1 June 2026:
| Engine size | Diesel — rate per mile |
| Up to 1600cc | 15p |
| Between 1601cc and 2000cc | 17p |
| Over 2000cc | 23p |
| Engine size | Petrol — rate per mile | LPG — rate per mile |
| Up to 1400cc | 14p | 11p |
| Between 1401cc and 2000cc | 17p | 13p |
| Over 2000cc | 26p | 21p |
| Home charging | 7p |
| Public charging | 15p |
For advisory fuel rate purposes, hybrid cars are treated as either petrol or diesel vehicles—so apply the relevant petrol or diesel rate based on the engine type.
Yes, HMRC reviews advisory fuel rates every quarter to reflect changes in fuel prices. These updates happen on:
The rates above apply from 1 June 2026 and will next be reviewed on 1 September 2026. It’s good practice to keep up to date with these changes so you’re always working with the most current figures.
You have two options when it comes to reporting your company car fuel benefits:
One update to be aware of is the changes to payrolling benefits. From April 2027, payrolling benefits will become mandatory. P11D forms are still valid from 2025/26 and 2026/27, but the deadline is closer than it might feel. If you are currently using P11D forms, it’s worth considering the switch to payroll processing now to stay ahead of the change.
Your employees will need to pay income tax on any car fuel benefit they receive. The taxable value is worked out using HMRC’s appropriate percentage, which considers the car’s CO2 emissions. Lower emission cars have a lower percentage and higher emission cards receive a higher percentage—the range runs from 3% to 37%.
Your company also has contributions to make. You’ll need to pay Class 1A National Insurance Contributions on the value of the car fuel benefit provided to your people.
Let’s put this into practice. Meet Sarah. She drives a petrol company car with a list price of £28,000 and CO2 emissions of 120g/km, which gives her an HMRC appropriate percentage of 29%.
So, in 2026/27, Sarah’s fuel benefit will cost her £1,693.60 in income tax, and her employer £1,168.58 in Class 1A NICs. It’s worth noting that Sarah’s actual private fuel costs are lower than £1,693.60 per year, she’d be better off repaying the fuel herself and opting out of the benefit entirely.
Here’s a brief explanation of how HMRC calculates their fuel rates:
By doing all this, HMRC makes sure that the advisory fuel rates are accurate and reflective of real driving conditions and fuel costs. Here is the calculation breakdown:
| Engine size (cc) | Mean MPG | Fuel price (per litre) | Fuel price (per gallon) | Rate per mile | Advisory fuel rate |
| Up to 1400 | 50.7 | 156.8 pence | 712.9 pence | 14.1 pence | 14 pence |
| 1401 to 2000 | 42.8 | 156.8 pence | 712.9 pence | 16.7 pence | 17 pence |
| Over 2000 | 27.2 | 156.8 pence | 712.9 pence | 26.2 pence | 26 pence |
| Engine size (cc) | Mean MPG | Fuel price (per litre) | Fuel price (per gallon) | Rate per mile | Advisory fuel rate |
| Up to 1600 | 55.7 | 188.8 pence | 858.3 pence | 15.4 pence | 15 pence |
| 1601 to 2000 | 49.6 | 188.8 pence | 858.3 pence | 17.3 pence | 17 pence |
| Over 2000 | 36.6 | 188.8 pence | 858.3 pence | 23.4 pence | 23 pence |
| Engine size (cc) | Mean MPG | Fuel price (per litre) | Fuel price (per gallon) | Rate per mile | Advisory fuel rate |
| Up to 1400 | 40.6 | 99.0 pence | 450.1 pence | 11.1 pence | 11 pence |
| 1401 to 2000 | 34.2 | 99.0 pence | 450.1 pence | 13.2 pence | 13 pence |
| Over 2000 | 21.7 | 99.0 pence | 450.1 pence | 20.7 pence | 21 pence |
If you want to avoid the fuel benefit charge by having employees repay their private fuel costs, HMRC expects solid records to back that up. That means detailed mileage logs that distinguish business from personal trips, fuel receipts, and records of any repayments made.
Without adequate records, HMRC may apply the fuel benefit charge regardless—and the burden of proof sits with you as the employer. A good mileage tracking system isn’t just helpful here; it’s your saving grace if HMRC has questions.
Getting company car fuel benefits wrong can be expensive. HMRC can charge penalties for inaccurate P11D submissions or incorrect payroll reporting, with the amount depending on whether the error is considered careless, deliberate, or concealed. Interest is also charged on late tax payments, and in more serious cases HMRC may open a formal compliance review covering several tax years.
The best way to avoid all of that? Keep accurate records, report on time, and use the correct rates—which is exactly why it’s worth staying up to date at the start of each new tax year.
Want to see first-hand how our platform streamlines calculations and reimbursements—all while keeping everything in line with HMRC’s advisory fuel rates—book a personalised demo today. From tracking every mile travelled to controlling spend with business expense cards, we’ve got everything you need to stay on track of every mile and every penny.
Unlock the power of real-time spending insights across your entire organisation. Dive into our brochure to discover how you can stay on top of reimbursements, bills, and credit card transactions as they happen, ensuring smarter financial decisions.
Yes—and for some employees, it may well be the better option. If an employee repays the full cost of all private fuel, the fuel benefit charge doesn’t apply. This is known as “making good” on the benefit, and to avoid the charge entirely, the full amount must be repaid by 6 July following the end of the tax year.
It’s worth communicating this option clearly—particularly to lower-mileage drivers, who might otherwise end up paying more in tax than the benefit is actually worth to them.
It really depends on how much an employee drives and spends on fuel. If they cover a lot of miles and their fuel costs exceed the value of the benefit charge, it usually works in their favour. But for lower-mileage drivers, the tax on the benefit could end up costing more than the fuel itself. It’s always worth doing the numbers before assuming it’s the right call.
