One element of the Chancellor\u2019s \u2018Great British Summer Saving\u2019 package was an increase in tax-free mileage rates.<\/b><\/p>\n
There is a curious divide in the way in which HMRC deals with cars used by employees for business:<\/p>\n
These days, few employers that provide company cars also supply \u2018free fuel\u2019 (petrol or diesel) to their employees. The simple reason is that the income tax and national insurance (NI) levied on the benefit is excessive. In most instances, both the employer and employee are better off when:<\/p>\n
For example, if you are a 40% taxpayer with a company BMW 320i, the tax you would pay for \u2018free fuel\u2019 in 2026\/27 is nearly \u00a34,100. Even at current prices, you could buy over 2,600 litres of petrol for that amount of money.<\/p>\n
HMRC publishes \u2018advisory fuel rates\u2019 for employers who compensate employees for fuel purchased for business travel in their company cars. The rates are updated quarterly and cover three different engine sizes for petrol, diesel and liquefied petroleum gas (LPG) cars, as well as electric cars either charged at home or using a public charger. Provided your employer pays no more than the advisory rate, there is no personal tax or NI liability.\u00a0<\/span><\/p>\n One current quirk is that you have no taxable benefit for private mileage if a company electric car is charged at the employer\u2019s expense (e.g., at the office).<\/p>\n The treatment for compensation for business mileage in an employee\u2019s own car is much less sophisticated, starting with no distinction for engine size or fuel. Until Rachel Reeves revealed a rate change as part of her recent cost-of-living package, since April 2011 the maximum tax-free rates had been:<\/p>\n The Chancellor increased the main rate to 55p a mile, retrospective to 6 April 2026. The 22.2% (10p) rise compares with consumer price index-inflation over the past 15 years of 52.5%.<\/p>\n While the rate increase is welcome and long overdue, it is just another example of how governments of all hues rely on inflation to boost the Treasury\u2019s coffers.\u00a0<\/p>\n Tax treatment varies according to individual circumstances and is subject to change. One element of the Chancellor\u2019s \u2018Great British Summer Saving\u2019 package was an increase in tax-free mileage rates. There is a curious divide in the way in which HMRC deals with cars used by employees for business: Company cars These days, few employers that provide company cars also supply \u2018free fuel\u2019 (petrol or diesel) to their […]<\/p>\n","protected":false},"author":2,"featured_media":11475,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wds_primary_category":33,"footnotes":""},"categories":[33],"tags":[],"class_list":["post-11474","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-newsletter","has-post-title","has-post-date","has-post-category","has-post-tag","has-post-comment","has-post-author",""],"builder_content":"","_links":{"self":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/posts\/11474","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/comments?post=11474"}],"version-history":[{"count":2,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/posts\/11474\/revisions"}],"predecessor-version":[{"id":11477,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/posts\/11474\/revisions\/11477"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/media\/11475"}],"wp:attachment":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/media?parent=11474"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/categories?post=11474"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/tags?post=11474"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Personally owned cars<\/b><\/h5>\n
\n
<\/i><\/b>The Financial Conduct Authority does not regulate tax advice. \u00a0<\/span><\/i><\/b><\/p>","protected":false},"excerpt":{"rendered":"