Find out about advisory fuel rates for company car users, when rates can be used, how to use them to claim for fuel, and how they are worked out.

Advisory Fuel Rates (AFRs) are the rates set by British Government to help businesses in either 

•  refunding fuel costs to employees for business travel in their company cars

or 

•  advise how much an employee should repay the company for private travel in a company car.

Latest Advisory Fuel Rates

HMRC, who sets the rates, is reviewing them quarterly on: 1 March, 1 June, 1 September, 1 December. These rates are depending on the vehicle's fuel type and of course the engine capacity. Latest advisory fuel rates are worked out in the next table:

The advisory electricity rate for 100% electric cars is 4 pence per mile whilst hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.

The employer does not need to use AFRs if the company cars are more fuel efficient than miles per gallon figures that are taken into account and is able to use own rates to reveal the situation. It is possible as well to repay more than AFRs, if it is demonstrated that the cost per mile is higher than the guideline rates.

If you pay the advisory rate than you keep all the things simple. If you pay above the advisory rates but cannot show the fuel cost per mile is higher, you risk that there will be no fuel benefit charge if the mileage payments are only for business travel. Instead, you’ll have to pay Class 1A National Insurance where the excess payment will be treated as taxable profit and as earnings.

The best way to keep up to date with AFRs is to visit gov.uk website where you can check out as well previous rates for comparison.