HMRC has released its latest advisory rates for fuel used in company cars, and while they help company car users manage their fuel usage and motoring costs more accurately, the new rates also highlight the cost benefits of driving electric vehicles (EVs). 

Advisory fuel rates are used to reimburse employees who use company cars for business travel, and the same rates are also used to determine what employees should repay when company cars are used for private travel. The rates are reviewed and amended by HMRC at quarterly intervals each year, usually in March, June, September and December. This is to ensure that they fairly reflect current industry usage and sales. 

Advisory fuel rates – effective September 1st 

As of September 1st 2024, the advisory fuel rates are: 

• Petrol cars – 1400cc or a smaller engine = 13p per mile, between 1401cc to 2000cc = 15p and over 2000cc = 24p. 

• Diesel cars – 1600cc or smaller engine = 12p, between 1601cc and 2000cc = 14p and over 2000cc = 18p. 

• EVs = 7p per mile 

• Hybrid cars – Same as for petrol and diesel vehicles 

While the new rates have dropped marginally from the last figures announced in June, the standout rate is 7p per mile for EVs, clearly showing that fuel costs for EV driving are widely accepted as being much cheaper. It has long been argued that EV driving is much more cost-efficient than driving a petrol or diesel vehicle, but there are several variables involved which can impact on this, such as battery size, the speed of charger you use and at what time you charge your vehicle (using a home charger you can charge overnight on much cheaper tariffs compared to charging during the day, or at public charging points, for example).  

Cost-effective EV driving  

Coupled with the more expensive initial cost of an EV, petrol and diesel drivers would argue that EV driving was not cost-effective, but the advisory fuel rate for EVs has been consistently falling in the last couple of years and is now almost 50% of the rate for even the smallest petrol or diesel engines. As the motor industry wakes up to the inevitable challenge of EVs we are finding that EV costs are reducing rapidly, to bring them more in line with petrol and diesel vehicles, and as technology improves this is very likely to continue. And with cheaper fuel rates and lower service and maintenance costs too (there are fewer moving parts in an EV, and hence less that can go wrong) the appeal of EVs is growing all the time. 

The advisory fuel rates play an important role in helping motorists manage their regular motoring costs, and they also help businesses too. And these new rates show drivers what costs they will face when signing up for a salary sacrifice car scheme with Pink Salary Exchange. Our cost models explain how the scheme works and with the advisory fuel rates you can see that EV driving is cost-effective, before you even start to consider the various other benefits. So if you are attracted by the cost savings to be made from driving a company car through a salary sacrifice scheme, then contact our team today.