Experts are warning that certain drivers will be “left out of pocket” following new HMRC changes introduced this month which will affect petrol, diesel and electric vehicle owners.
On December 1, HM Revenue and Customs (HMRC) unveiled new Advisory Fuel Rates which affects reimbursing employees for business travel in their company cars or if employees need to pay for the cost of fuel for private travel.
As part of the new changes, which happen four times a year, all electric vehicle owners remain at 7p if they use it as a company car.
However, experts are now warning that motorists may be underpaid by hundreds of pounds a year in some cases.
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The new Advisory Fuel Rates were introduced on December 1
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The data, from Paua, suggested that a company car driver doing around 20 per cent of their charging on the public network could lose £200 or more.
Analysis from the group also noted that higher mileage drivers, as well as those who charge away from home, are the most impacted.
One of the most popular electric vehicles used as part of company car schemes includes the Polestar 2 thanks to its impressive 342-mile range and its competitive £47,950 price tag.
A driver of a Polestar 2 doing 6,000 business miles a year who does most of their charging at a public charger could lose out on £800 a year, Fleet News reported.
Similarly, a Jaguar I-Pace doing 10,000 miles a year with all charging done in public could have to fork out more than £2,000.
Niall Riddell, CEO at Paua, said: “Paua makes it simple for businesses to properly compensate employees and be compliant with HMRC.
“Businesses are pushing drivers to adopt electric vehicles but without the right compensation mechanisms in place they risk underpaying their drivers for the business miles they complete. This can leave them in a sticky situation.”
HMRC releases its AFR rates four times per year, with the next review coming on March 1, followed by June 1, September 1 and December 1.
Advisory fuel rates from December 1, 2024
Petrol
Engines up to 1,400cc – Reduced to 12p
Between 1,401cc and 2,000cc – Reduced to 14p
Over 2,000cc – Reduced to 23p
Diesel
Engines up to 1,600cc – Reduced to 11p
Between 1,601cc and 2,000cc – Reduced to 13p
Over 2,000cc – Reduced to 17p
LATEST DEVELOPMENTS:
Advisory Fuel Rates for electric vehicles were kept the same in December
PA
Liquefied Petroleum Gas (LPG)
Engines up to 1,400cc – Remains at 11p
Between 1,401cc and 2,000cc – Remains at 13p
Over 2,000cc – Remains at 21p
Any hybrid vehicles are treated either as petrol or diesel vehicles for advisory fuel rates.
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