Fuel Advisory Rates are updated by HMRC

From today, June 1, 2023, HMRC has updated its Advisory Fuel Rates (AFR).

Rates can be used for business travel in company cars or for reimbursing employees for private travel fuel used in their company cars.

Depending on engine size, the diesel AFR will decrease between 1p and 2p per mile, while petrol and electric vehicles will remain unchanged.

EVs' Advisory Electricity Rate (AER) remains unchanged at 9p per mile, while hybrid vehicles' AFRs are determined by their fuel type.

AFR for petrol vehicles

Up to 1,400cc: 13 pence (no change)
1,401cc – 2,000cc: 15 pence (no change)
Over 2,000cc: 23 pence (no change)

AFR for diesel vehicles

Up to 1,600cc: 12 pence (minus 1p)
1,601cc – 2,000cc: 14 pence (minus 1p)
Over 2,000cc: 18 pence (minus 2p)

There will be no taxable profit and no Class 1A National Insurance if the mileage rate you pay is no higher than the advisory fuel rate for the engine size and fuel type of the company car.

You can use your own rates to reflect your situation if your cars are more fuel efficient or if the cost of business travel is higher than the guideline rates.

If you pay higher mileage rates than the advisory rates but cannot prove the fuel cost per mile is higher, the fuel benefit charge will not apply if the mileage payments are only for business travel. Instead, you’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.

Reimbursement of fuel costs for private travel by employees

To calculate how much your employees must repay you for fuel used for private travel, you must correctly record all private travel mileage and use the correct rate (or higher).

If you repay at a lower mileage rate, you will not have to use the advisory rates where employees cover the full cost of private fuel.

HMRC review rates quarterly on:

  • 1 March

  • 1 June

  • 1 September

  • 1 December

Based on manufacturers' information and annual sales to businesses (Fleet Audits average 2019-2021), the mean miles per gallon is calculated.

Due to a lower volumetric energy density, liquefied petroleum gas (LPG) has a lower MPG than petrol.

In these tables, 'rates per mile' are shown rounded to one decimal place, but final advisory fuel rates are rounded to the nearest whole penny.

When the underlying unrounded figure ends in a number less than 0.5 (for example 0.487), the advisory fuel rate is rounded down to the nearest whole penny.

In cases where the underlying unrounded figure exceeds 0.5 (such as 0.513), it is rounded to the nearest whole penny.

Prices for petrol and diesel are taken from the Department for Business, Energy, and Industrial Strategy, and those for LPG (UK average) are taken from the Automobile Association.

Advisory electric rates for fully electric cars are calculated using electrical price data from:

  • Department for Business, Energy & Industrial Strategy (BEIS)

  • Office for National Statistics (ONS)

  • Car electrical consumption rates from the Department for Transport (DfT)

  • Annual car sales volumes to businesses (Fleet Audits average for the last 3 years)

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