Advisory Fuel Rates

The latest Advisory Fuel Rates (AFRs) were recently published by the HMRC, and take effect from the 1st September 2020.

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. And 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 (currently 17 pence per mile), the lowest rate is for cars with small LPG engines (currently 7 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 September 2020.

Advisory Fuel Rates – from 1st September 2020

Engine Size Petrol – pence per mile LPG – pence per mile
1400cc or less10 pence7 pence
1401cc to 2000cc12 pence8 pence
Over 2000cc17 pence12 pence
Engine Size Diesel – pence per mile
1600cc or less 8 pence
1601cc to 2000cc 10 pence
Over 2000cc 12 pence

Hybrid Cars

  • 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

The Advisory Electric Rate (AER), for pure electric company cars, is 4ppm. This is free of tax and National Insurance.

Advisory Fuel Rates used to calculate VAT on mileage expenses when driving your own car

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

Hence:

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 Rates are:

  • LPG engine 1400cc or less, increased by 1p per mile to 7ppm
  • LPG engine Over 2000cc, increased by 1p per mile to 12ppm
  • Diesel engine 1601cc to 2000cc, increased by 1p per mile to 10ppm

Previous Advisory Fuel Rates

Rates from 1 June 2020 to 31 August 2020

Engine Size Petrol – pence per mile LPG – pence per mile
1400cc or less10 pence6 pence
1401cc to 2000cc12 pence8 pence
Over 2000cc17 pence11 pence
Engine Size Diesel – pence per mile
1600cc or less 8 pence
1601cc to 2000cc 9 pence
Over 2000cc 12 pence

Rates from 1 March 2020 to 31 May 2020

Engine Size Petrol – pence per mile LPG – pence per mile
1400cc or less12 pence8 pence
1401cc to 2000cc14 pence10 pence
Over 2000cc20 pence14 pence
Engine Size Diesel – pence per mile
1600cc or less 9 pence
1601cc to 2000cc 11 pence
Over 2000cc 13 pence

Rates from 1 December 2019 to 29 February 2020

Engine Size Petrol – pence per mile LPG – pence per mile
1400cc or less12 pence8 pence
1401cc to 2000cc14 pence9 pence
Over 2000cc21 pence14 pence
Engine Size Diesel – pence per mile
1600cc or less 9 pence
1601cc to 2000cc 11 pence
Over 2000cc 14 pence

N.B. The Advisory Fuel Rates for earlier periods can be found at www.gov.uk

Tripcatcher users – these rates are updated for you so there is nothing for you to do!!!