The latest Advisory Fuel Rates (AFRs) have recently been published by the HMRC, and take effect from the 1st December 2019
What are Advisory Fuel Rates?
The HMRC Advisory Fuel Rates are the recommended reimbursement rates, for employees reclaiming business travel, usually in company vehicles. They are also known as “HMRC company car mileage rates”. These Advisory Fuel Rates are also used to calculate the fuel portion of a mileage claim. This is important when claiming VAT on mileage expenses. This is explained in more detail below.
The Advisory Fuel Rate is based on the engine size and fuel type of your car. To illustrate, the highest rate is for cars with large petrol engines (21 pence per mile), the lowest rate is for cars with small LPG engines (8 pence per mile).
HMRC update the Advisory Fuel Rates quarterly to take account of changes in fuel prices. The latest rates are shown below and are valid from the 1st December 2019.
Advisory Fuel rates – from 1st December 2019
|Engine Size||Petrol – pence per mile||LPG – pence per mile|
|1400cc or less||12 pence||8 pence|
|1401cc to 2000cc||14 pence||9 pence|
|Over 2000cc||21 pence||14 pence|
|Engine Size||Diesel – pence per mile|
|1600cc or less||9 pence|
|1601cc to 2000cc||11 pence|
|Over 2000cc||24 pence|
- Drivers of petrol/electric hybrid cars can use the petrol rates
- Drivers of diesel/electric hybrid cars can use the diesel rates
Advisory Electric Rate
As for the last three quarters, the Advisory Electric Rate (AER), for pure electric cars, is 4ppm. This is free of tax and National Insurance.
The use of Advisory Fuel Rates in calculating the VAT on mileage expenses
The HMRC Advisory Fuel Rate can also used to calculate the fuel portion of your mileage claim. Therefore, this is important if you drive your own car for business and your business (or employer) claims VAT on your mileage expenses.
The formula for calculating the VAT on mileage expenses using the Advisory Fuel Rate is:
Fuel portion = advisory fuel rate x business miles claimed
VAT = fuel portion / 6
VAT on mileage = (advisory fuel rate x business miles claimed) / 6
If you want to find out more about claiming VAT on your mileage expenses please see our blog VAT on mileage expenses – how to claim.
Finally, the changes to the current Advisory Fuel Rates are:
- Diesel engine 1600cc or less, decreased by 1p per mile to 9p
- LPG engine 1401cc to 2000cc, decreased by 1p per mile to 9p
N.B. The Advisory Fuel Rates for earlier periods can be found at www.gov.uk
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