Search
Close this search box.
Sign up for our weekly Newsletter

HMRC publishes latest AFRs

The latest petrol and diesel prices are taken from the Department for Business, Energy and Industrial Strategy and the LPG (UK average) is from the Automobile Association website. You will not need to use the advisory rates where you can show that employees cover the full cost of private fuel by repaying at a lower mileage rate.
Man filling up with fuel

Share

30 August 2022

HMRC has published its new Advisory Fuel Rates (AFRs), effective from September 1  2022 for employees using a company car.

The rates should be used when you either:

  • reimburse employees for business travel in their company cars
  • need employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

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

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

If you pay rates that are higher than the advisory rates but cannot show the fuel cost per mile is higher, there will be no fuel benefit charge 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.

There will be no fuel benefit charge if you correctly record all private travel mileage and use the correct rate (or higher), to work out how much your employees must repay you for fuel used for private travel.

You will not need to use the advisory rates where you can show that employees cover the full cost of private fuel by repaying at a lower mileage rate.

How rates are calculated

HMRC review rates quarterly on:

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

The mean miles per gallon (MPG) is taken from manufacturers’ information, taking into account annual sales to businesses (Fleet Audits average 2019 to 2021).

For liquefied petroleum gas (LPG), the MPG used is 20% lower than for petrol due to lower volumetric energy density.

The ‘rates per mile’ calculated in these tables are shown rounded to one decimal place, but the final advisory fuel rates are rounded to the nearest whole penny.

Rates per mile which end in 0.5 are rounded down to the nearest whole penny for the advisory fuel rate when the underlying unrounded figure ends in a number less than 0.5 (for example 0.487).

When the underlying unrounded figure ends in a number greater than 0.5 (for example 0.513) it is rounded up to the nearest whole penny.

The latest petrol and diesel prices are taken from the Department for Business, Energy and Industrial Strategy and the LPG (UK average) is from the Automobile Association website.

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

  • Department for Business, Energy & 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).

The advisory fuel rates are worked out from the fuel prices in these tables.

Petrol

Engine size (cc) Mean MPG Fuel price (per litre) Fuel price (per gallon) Rate per mile Advisory fuel rate
Up to 1400 51.9 174.2 pence 791.9 pence 15.3 pence 15 pence
1401 to 2000 44.1 174.2 pence 791.9 pence 18.0 pence 18 pence
Over 2000 28.8 174.2 pence 791.9 pence 27.5 pence 27 pence

Diesel

Engine size (cc) Mean MPG Fuel price (per litre) Fuel price (per gallon) Rate per mile Advisory fuel rate
Up to 1600 60.7 185.2 pence 841.8 pence 13.9 pence 14 pence
1601 to 2000 49.8 185.2 pence 841.8 pence 16.9 pence 17 pence
Over 2000 38.8 185.2 pence 841.8 pence 21.7 pence 22 pence

LPG

Engine size (cc) Mean MPG Fuel price (per litre) Fuel price (per gallon) Rate per mile Advisory fuel rate
Up to 1400 41.5 83.7 pence 380.5 pence 9.2 pence 9 pence
1401 to 2000 35.3 83.7 pence 380.5 pence 10.8 pence 11 pence
Over 2000 23.0 83.7 pence 380.5 pence 16.5 pence 17 pence

The advisory electricity rate for fully electric cars is 5 pence per mile. Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.

 

Award Winners 2024

Share this article

Facebook
Twitter
LinkedIn
WhatsApp
Reddit
Email

Want more motoring news?

Sign up here for our free weekly serving of motoring.

Sign up here for our free weekly serving of motoring.

Chris Wright

Chris Wright

Chris Wright has been covering the automotive industry nationally and internationally for 30 years. Following spells with consumer titles he became News Editor of Automotive Management (AM), Editor of Automotive International, International Editor for Detroit-based Automotive News, and Editor of Dealer Update. He has also co-authored several FT Management Reports and contributes regularly to Justauto.com

Latest news

Top