Employers can reimburse their staff for business travel in company cars. Until now, the rate for wholly electric cars has been fixed at 5p, but that will change from 1 December. What’s the full story?
Advisory fuel rates for company cars are published by HMRC on a quarterly basis. The benefit to using the rates is that there will be no benefit-in-kind charge to the employee. It’s possible to use a higher rate, but you must show that the actual fuel cost per mile is greater than the advisory rates. HMRC has just published the advisory rates applicable from 1 December 2022, and these include a welcome announcement for employees using wholly electric vehicles (EVs). Going forward, the rate for EVs will be reviewed quarterly in the same way as those for petrol, diesel and LPG vehicles. The rate from 1 December will increase from 5p to 8p – a 60% jump reflecting the inflated price of energy. Note that hybrid cars do not qualify as EVs, so the appropriate petrol or diesel rate should be used instead.
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.