HMRC recently released the Advisory Fuel Rates (
AFR). The AFR will only affect company car users and will last until 1 June 2021 when the next quarter's rates will be applied.
The AFR must only be used in the following two circumstances:
- When reimbursing employees for business travel in their company cars
- When the business needs employees to repay the cost of fuel used for private travel
Company car drivers and businesses should also be aware of the
Car Fuel Benefit Charge. A cash payment to an employer to payback any private fuel provided can create overall cash savings. This might not apply to all company car drivers, but it is worth checking to see if a repayment is possible. You can find more in our blog:
Repay Private Petrol and Save Tax
These rates should not be used in any other circumstances. If the rates are used, it is not necessary to apply for an exemption to cover the payments made. When employees are reimbursed for business travel in their company cars, HMRC will agree there is no taxable profit and no Class 1A National Insurance to account for.
The advisory electricity rate for fully electric cars is 4 pence per mile and Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.
The advisory fuel rates for petrol, LPG and diesel cars are shown in the tables below.
From 1 March 2021
| Engine Size |
Petrol - rate per mile |
LPG - rate per mile |
| 1400cc or less |
10 pence |
7 pence |
| 1401cc to 2000cc |
12 pence |
8 pence |
| Over 2000cc |
18 pence |
12 pence |
| Engine Size |
Diesel - rate per mile |
| 1600cc or less |
9 pence |
| 1601cc to 2000cc |
11 pence |
| Over 2000cc |
12 pence |
If you require assistance with the above please contact a member of our Tax Team here:
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