Advisory Fuel Rates (AFRS) Changes

From 1st March 2023, HMRC announced a fall in advisory fuel rates (AFR). Clients can use the old rates up until 31st March 2023.

New Advisory Fuel Rates

Use the AFR to reimburse employees who use a company car/van for business travel, or to acquire fuel repayments from employees who use the company car/van for private travel.

Below is an outline of the new rates from 1st March 2023 (the previous rates are included in brackets).

Engine SizeElectric per milePetrol per mileLPG per mileDiesel per mile
Up to 1,400cc13p (14p)10p (10p)
1,401cc to 2,000cc15p (17p)11p (12p)
Up to 1,600cc13p (14p)
1,601cc to 2,000cc15p (17p)
Over 2,000cc23p (26p)17p (18p)20p (22p)
N/A9p (8p)

If an employee drives a hybrid car, you have to use the advisory fuel rate for either petrol or diesel, depending on the car in question.

What Does This Mean For My Business?

If you pay your employees for fuel to use for private journeys in a company vehicle, and the employee reimburses them at the appropriate AFR, the vehicle fuel benefit in kind does not apply.

Additionally, if an employee pays for fuel used for business journeys in a company vehicle, you can reimburse them at the AFR rate, tax and National Insurance free.

Payments above the AFRS count as taxable earnings.

Remember that HMRC updates the fuel advisory rates four times a year, prices determined based on current fuel prices. The next update will be from 1st June 2023.

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