What are they?
Advisory Fuel Rates (AFRs) and Advisory Electricity Rates (AERs) can be used by employers to calculate fuel costs for tax purposes. They may apply to company cars when an employee is required to repay the cost of fuel used for private travel or when the company reimburses an employee for business mileage. The rates are not binding so less can be paid, but detailed documentary evidence of actual fuel costs will be required if the employer wishes to pay a higher rate and claim the full costs against tax.
Companies may be able to reclaim the VAT element of business fuel costs, provided there are mileage records and VAT receipts to cover the expenditure.
Income tax and NI
No tax or NICs will arise where an employee is reimbursed at less than or equal to the AFR/AER on business mileage.
You can use the previous rates for up to 1 month from the date the new rates apply.
Hybrid and plug-in hybrid cars
Hybrid cars are classed as either petrol or diesel cars for AFRs. HMRC has not issued AFRs for plug-in hybrids
The rates are reviewed four times a year. Any changes will take effect at the beginning of each three month period - on 1 March, 1 June, 1 September and 1 December and will be published on the HMRC website shortly before the date of change.
For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they wish, but are under no obligation to do either.
HMRC will also accept the figures in the table for VAT purposes though employers will need to retain receipts in line with current legislation.
Period from 01 Dec 2023 to 29 Feb 2024
|Engine size (cc)||Petrol (p)||Diesel (p)||LPG (p)|
|cc0 - 1400||p14.0||p13.0||p10.0|
|cc1401 - 1600||p16.0||p13.0||p12.0|
|cc1601 - 2000||p16.0||p15.0||p12.0|
|cc2001 and over||p26.0||p20.0||p18.0|
Advisory Electricity Rates (AERs)
As electric cars do not have an engine size, there is a single AER for all pure electric vehicles.
Rate of 9 pence per mile from 01 December 2023