Company Car Tax Guide

Use of Advisory Fuel Rates

The advisory fuel rates (guidelines on fuel only mileage rates for company cars) were first published in January 2002. It has been possible to use them since then to negotiate dispensations for mileage payments for business travel in company cars.

They are intended to reflect actual average fuel costs at the time they are set. The aim is to save time for both employers and the Revenue by setting out some figures that can be used in the majority of cases. They give employers more certainty about what the mileage rates that they choose to apply mean for tax and National Insurance contributions (NICs).

The rates only apply where employers:

• reimburse employees for business travel in their company cars, or
• require employees to repay the cost of fuel used for private travel.

The rates do not apply in any other circumstances. In particular, employees driving company cars are not entitled to use them to claim a deduction if employers reimburse them at lower rates. Such claims should continue to be based on actual costs incurred.