New two-tier mileage rates for electric vehicles
The amount that employers can reimburse staff for business travel in company cars changes from 1 September 2025. What are the new rates, and why is this update different to previous ones?
Advisory fuel rates for company cars are updated by HMRC on a quarterly basis due to fluctuations in fuel prices. The rates determine the amount that can be paid to an employee using a company car for business mileage, or where an employee has to reimburse their employer for private journeys. Where HMRC’s rates are used, there are no income tax consequences for the employee. HMRC has now published the advisory rates applicable from 1 September 2025. The rate per mile will be:
| Engine size | Petrol | LPG |
|---|---|---|
| 1,400cc or less | 12p | 11p |
| 1,401cc to 2,000cc | 14p | 13p |
| Over 2,000cc | 22p | 21p |
| Engine size | Diesel |
|---|---|
| 1,600cc or less | 12p |
| 1,601cc to 2,000cc | 13p |
| Over 2,000cc | 18p |
The big difference this time is the introduction of a second electricity rate for fully electric cars. For 1 September, the two rates will be:
- 8 pence per mile for home charging
- 12 pence per mile for public charging
Related Topics
-
HMRC launches new R&D advance assurance process
HMRC has introduced a new advance assurance process for research and development (R&D) tax relief claims, aimed at giving eligible companies greater certainty before submitting a claim. What does the new process involve?
-
Dodging tax and NI on 2025/26 benefits
If you had taxable benefits in kind in 2025/26 then you’ll have to pay income tax on the value. Your company also has to pay 15% NI. Now the tax year has passed is there any way you can reduce or eliminate this tax liability?
-
Selling spare items to your company
You’re short of cash but if you use the traditional methods to take more money out of your company you’ll pay higher rate taxes. Is there another way to extract profits without paying income tax or NI?