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What are the advisory fuel rates for electric cars?

What are Advisory Fuel Rates?

Advisory Fuel Rates (AFRs) are the Government’s recommended rates for reimbursing employees’ fuel costs. Company car drivers are able to reclaim their fuel or electricity expenditure for driving for business purposes. It also allows drivers who use their private car for company business to reclaim those miles on the same rates.

For HMRC purposes, salary sacrifice vehicles are viewed as company cars.

Each quarter, HMRC announce updated advisory rates, which reflect the changes to prices of fuel and electricity.

 

What were the changes to the Advisory Rates?

September’s update went some way to reflect the changes seen at the pump, but didn’t update the electricity rates for electric car drivers.

December’s update has updates for all fuel types, including electricity. Petrol rates have decreased slightly, to reflect the reduction of fuel prices at the pump. Whereas electricity has increased from 5 pence per mile to 8 pence per mile.

The government has announced that electric pence per mile rates will be included on a quarterly basis moving forwards in the same way it reviews petrol, diesel and LPG rates.

 

What are the current rates?

As of 1st December 2022, the rates are set at:

Diesel AFR:
Engine size (cc) Mean MPG Fuel price (per litre) Fuel price (per gallon) Rate per mile Advisory fuel rate
Up to 1600 60.7 188.9 pence 858.5 pence 14.2 pence 14 pence
1601 to 2000 49.8 188.9 pence 858.5 pence 17.2 pence 17 pence
Over 2000 38.8 188.9 pence 858.5 pence 22.1 pence 22 pence
Petrol AFR:
Engine size (cc) Mean MPG Fuel price (per litre) Fuel price (per gallon) Rate per mile Advisory fuel rate
Up to 1400 51.9 164.4 pence 747.4 pence 14.4 pence 14 pence
1401 to 2000 44.1 164.4 pence 747.4 pence 17.0 pence 17 pence
Over 2000 28.8 164.4 pence 747.4 pence 25.9 pence 26 pence
Electric AFR:
A flat rate of 8 pence.

 

What are the Advisory Rates for Hybrid cars?

Hybrid cars are treated as either petrol or diesel cars for AFR purposes

 

Where are HMRCs Advisory Fuel Rates published?

For more information, please go to:

https://www.gov.uk/guidance/advisory-fuel-rates

 

How often are the rates update?

HMRC review rates quarterly on:

  • 1st March
  • 1st June
  • 1st September
  • 1st December

How do they decide on the rate?

The latest petrol and diesel rates are taken from the Department for Business, Energy and Industrial Strategy.

The advisory electric rate for fully electric cars is calculated using electrical price data from:

  • Department for Business, Energy and Industrial Strategy
  • Office for National Statistics
  • Electrical consumption rates from the Department for Transport

It takes into account annual sales to businesses (Fleet Audits average 2019 to 2021).

 

Why do companies use AFRs?

AFRs help companies stick to the rules surrounding tax and Class 1A National Insurance costs when it comes to fuel or electricity for company cars or private vehicles used for business purposes.

It also helps companies meet with HMRC requirements, as when reimbursing employees for fuel costs from a business trip, so long as a company pays the associated AFR to the employee for their expenses, they don’t need to pay Class 1A National Insurance. It is also accepted that there is no taxable profit. Any more than these rates, and that would require extra reporting.

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