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 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.

June 2022 rates

Engine SizePetrolDieselLPGElectric
Up to 1400cc14PPMN/A9PPM5PPM
Up to 1600ccN/A13PPMN/A5PPM
1401cc to 2000cc17PPMN/A11PPM5PPM
1601cc to 2000ccN/A16PPMN/A5PPM
Over 2000cc25PPM19PPM16PPM5PPM

March 2022 rates

Engine SizePetrolDieselLPGElectric
Up to 1400cc13PPMN/A8PPM5PPM
Up to 1600ccN/A11PPMN/A5PPM
1401cc to 2000cc15PPMN/A10PPM5PPM
1601cc to 2000ccN/A13PPMN/A5PPM
Over 2000cc22PPM16PPM15PPM5PPM

December 2021 rates

Engine SizePetrolDieselLPGElectric
Up to 1400cc13PPMN/A9PPM5PPM
Up to 1600ccN/A11PPMN/A5PPM
1401cc to 2000cc15PPMN/A10PPM5PPM
1601cc to 2000ccN/A13PPMN/A5PPM
Over 2000cc22PPM16PPM15PPM5PPM

September 2021 rates

Engine SizePetrolDieselLPGElectric
Up to 1400cc12PPMN/A7PPM4PPM
Up to 1600ccN/A10PPMN/A4PPM
1401cc to 2000cc14PPMN/A8PPM4PPM
1601cc to 2000ccN/A12PPMN/A4PPM
Over 2000cc20PPM15PPM12PPM4PPM

June 2021 rates

Engine SizePetrolDieselLPGElectric
Up to 1400cc11PPMN/A8PPM4PPM
Up to 1600ccN/A9PPMN/A4PPM
1401cc to 2000cc13PPMN/A9PPM4PPM
1601cc to 2000ccN/A11PPMN/A4PPM
Over 2000cc19PPM13PPM14PPM4PPM

March 2021 rates

Engine SizePetrolDieselLPGElectric
Up to 1400cc10PPMN/A7PPM4PPM
Up to 1600ccN/A9PPMN/A4PPM
1401cc to 2000cc12PPMN/A8PPM4PPM
1601cc to 2000ccN/A11PPMN/A4PPM
Over 2000cc18PPM12PPM12PPM4PPM

December 2020 rates

Engine SizePetrolDieselLPGElectric
1400cc or less10PPMN/A7PPM4PPM
1600cc or lessN/A8PPMN/A4PPM
1401cc to 2000cc11PPMN/A8PPM4PPM
1601cc to 2000ccN/A10PPMN/A4PPM
Over 2000cc17PPM12PPM12PPM4PPM

September 2020 rates

Engine SizePetrolDieselLPGElectric
Up to 1400cc10PPMN/A7PPM4PPM
Up to 1600ccN/A8PPMN/A4PPM
1401cc to 2000cc12PPMN/A8PPM4PPM
1601cc to 2000ccN/A10PPMN/A4PPM
Over 2000cc17PPM12PPM12PPM4PPM

June 2020 rates

Engine SizePetrolDieselLPGElectric
Up to 1400cc10PPMN/A6PPM4PPM
Up to 1600ccN/A8PPMN/A4PPM
1401cc to 2000cc12PPMN/A8PPM4PPM
1601cc to 2000ccN/A9PPMN/A4PPM
Over 2000cc1712PPM11PPM4PMM

March 2020 rates

Engine SizePetrolDieselLPGElectric
1400cc or less12PPMN/A8PPM4PPM
1600cc or lessN/A9PPMN/A4PPM
1401cc to 2000cc14PPMN/A10PPM4PPM
1601cc to 2000ccN/A11PPMN/A4PPM
Over 2000cc20PPM13PPM14PPM4PPM