Major warning for petrol and diesel car owners as HMRC introduces new rules

Petrol and diesel car owners are being urged to pay close attention to new HMRC rules that came into effect on 1 December 2024. These changes form part of HMRC’s latest Advisory Fuel Rate (AFR) update — and they could have a direct impact on your finances if you drive a company car or claim mileage for business travel.

What Are the New HMRC Rules?

The updated AFRs determine how much employees can be reimbursed per mile for business travel in a company car — or how much they must repay if they use company‑funded fuel for private journeys.

Here are the new pence‑per‑mile (ppm) rates:

Petrol Cars

• Up to 1,400cc: 12p (reduced)
• 1,401cc–2,000cc: 14p (reduced)
• Over 2,000cc: 23p (reduced)

Diesel Cars

• Up to 1,600cc: 11p (reduced)
• 1,601cc–2,000cc: 13p (reduced)
• Over 2,000cc: 17p (reduced)

LPG Cars

• Up to 1,400cc: 11p (unchanged)
• 1,401cc–2,000cc: 13p (unchanged)
• Over 2,000cc: 21p (unchanged)

Electric Cars

• 7p per mile (unchanged)

These rates apply to all company car drivers and employers who reimburse mileage.

If you want a clearer breakdown of how company car tax worked previously, this has got everything you need.

For more information on how you could save on your car tax, this guide has got you covered.

Why These Changes Matter for Petrol and Diesel Drivers

The AFRs determine whether:

• Your mileage reimbursement is tax‑free, or
• You could face taxable profit and Class 1A National Insurance charges

If your employer pays more than the AFR without evidence of higher fuel costs, the excess becomes taxable. If they pay less, you may be out of pocket unless you claim tax relief.

These new, lower rates mean petrol and diesel drivers need to be especially careful to avoid unexpected tax liabilities.

What Should Car Owners Do Now?

To stay compliant and avoid financial penalties, petrol and diesel car owners should:

1. Review the new AFR rates

Make sure you know the correct rate for your engine size and fuel type.

2. Update your mileage records

Accurate logs of business and private travel are essential for HMRC compliance.

3. Speak to your employer

Ensure your company’s reimbursement policy aligns with the new HMRC rates.

4. Consider your vehicle’s efficiency

If your car is more fuel‑efficient than HMRC’s guideline rates, you may need to calculate your own actual cost per mile.

5. Stay informed

HMRC updates AFRs quarterly — missing a change could cost you money.

Final Thoughts

These new HMRC rules may seem small, but they can have a big impact on company car drivers — especially those using petrol or diesel vehicles. Staying informed, keeping accurate mileage records and checking your employer’s reimbursement policy will help you avoid unexpected tax bills.

If these changes have you thinking about switching to a more efficient car — or selling your current one — Jamjar.com can help you get the best price quickly and easily.

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