HMRC Advisory Fuel Rates

HMRC Advisory Fuel Rates and Electricity Rates

Organisations use HMRC Advisory Fuel Rates (AFRs) and Advisory Electricity Rates (AERs) to reimburse company car mileage for business use only.

As long as the mileage rate used to pay employees for business mileage is less than or equal to the appropriate AFR/AER, then there is no taxable profit or Class 1A National Insurance to be paid.

Use AFRs when employees utilise internal combustion engine vehicles, and AERs for employees using electric vehicles.

All organisations that utilise a fleet must be aware of these rates. Not using these rates will lead to employees being out of pocket or businesses paying too much.

HMRC updates the AFRs every year on 1st March, 1st June, 1st September and 1st December.

Updates to the AERs are periodic to reflect the cost of electricity.

How do HMRC calculate the AFRs?

By dividing the fuel price per gallon (in pence) by the relevant MPG.

How should I pay my employees?

To clarify, these rates are for paying employees who have a company car as part of their benefit package. When paying employees who use private cars (grey fleet), businesses should pay 45ppm (pence per mile) for the first 10,000 miles, and 25ppm thereafter.

Businesses have several options for paying this fuel. Firstly, they may choose to pay immediately after the mileage has been done. Alternatively, and more commonly, they will pay mileage when the employee submits their expenses.

If you need help writing your fleet policy, please get in touch with one of our experts, who are more than happy to help.

March 2024 rates

Engine Size Petrol Diesel LPG Electric
< 1400cc 13 11 9
<1600cc 12 9
1401 to 2000cc 15 13 9
1601 to 2000cc 14 9
Over 2000cc 24 19 21 9

December 2023 rates

Engine Size Petrol Diesel LPG Electric
< 1400cc 14 10 9
<1600cc 13 9
1401 to 2000cc 16 12 9
1601 to 2000cc 15 9
Over 2000cc 26 20 18 9

September 2023 rates

Engine Size Petrol Diesel LPG Electric
< 1400cc 13 10 10
<1600cc 12 10
1401 to 2000cc 16 12 10
1601 to 2000cc 14 10
Over 2000cc 25 18 19 10

June 2023 rates

Engine Size Petrol Diesel LPG Electric
< 1400cc 13 10 9
<1600cc 12 9
1401 to 2000cc 15 12 9
1601 to 2000cc 14 9
Over 2000cc 23 18 18 9

March 2023 rates

Engine Size Petrol Diesel LPG Electric
< 1400cc 13 10 9
<1600cc 13 9
1401 to 2000cc 15 11 9
1601 to 2000cc 15 9
Over 2000cc 23 20 17 9