From January 1, 2008, the rate at which employees can claim back for fuel they have used while driving for business will rise to 11 pence per mile for cars – diesel or petrol – that have an engine lower than 1,401cc.
The rate rises to 13 pence per mile for petrol-powered cars between 1,401cc and 2,000cc, and 19 pence for petrol cars with engines larger than two litres.
For diesel, the rate remains at 11 pence per mile unless the engine is over two litres, in which case the rate rises to 14 pence.
The rates were calculated using a per-litre price for unleaded petrol of 102.1 pence and 106.3 pence for diesel, already 1.1 pence below the current pump price.
The rates will be reviewed twice a year and any changes will take effect on January 1 and July 1 each year.
HMRC said it will also consider changing the rates if fuel prices fluctuate by 5% during each six-month period.