Business Journeys in Company Cars

Where an employer provides a company car, but the employee pays for the fuel, the employer may pay a mileage allowance for business journeys.

Payments that do not exceed their published ‘advisory fuel rates’ (AFRs) are reimbursements of expenses and are not subject to Class 1 NIC or Income Tax.

The rates are reviewed every three months 1 March, 1 June, 1 September, 1 December. With effect from 1 March 2012:-

Petrol cars

up to 1400cc        15p

1401 to 2000cc    18p

over 2000cc         26p

Petrol includes hybrid cars

Diesel cars

up to 1600cc          13p

1601 to 2000cc      15p

over 2000cc           19p


Up to 1400cc          10p

1401 to 2000cc       12p

over 2000cc            18p

These rates may also be used to reclaim input VAT in respect of fuel used for business journeys (remember to keep receipts)

The ‘advisory fuel rates’ scheme does not apply in any circumstances to business or private travel in a company-owned van.