Government reduces Advisory Fuel Rates for company car drivers

Company Fleet  Driver Guides  HMRC / Tax 

Company car drivers claiming back petrol and diesel costs from their employers will receive less from next month.

The new Advisory Fuel Rates (AFRs) published by HMRC, which come into force from Friday, 01 March 2024, see rates fall for all fuels except EVs, which remain at 9 pence per mile.

Drivers with petrol or diesel engines up to two litres receive 1p less per mile. Drivers with larger petrol engines see their reimbursement rate fall 2p per mile. Drivers of hybrid and plug-in hybrid vehicles should use the appropriate petrol or diesel AFR figures.

These rates only apply to employees using a company car. They can be used by companies to reimburse drivers for business travel or to arrange repayment from drivers for their private mileage.

If a fleet is more fuel efficient, or the cost of business travel is higher than the guideline rates, companies can use their own rates.

Should a company pay more than the guideline rate, without being able to prove its fuel cost per mile is higher, it will have to treat any excess as taxable profit and as employee earnings for National Insurance purposes, but there is no fuel benefit charge.

Similarly, there is no fuel benefit charge if a company uses a lower mileage rate when employees repay private fuel, if it can be shown that the full cost of fuel is covered.

You can see last quarter’s rates here.

The new AFRs from 01 March 2024 are:

Petrol (inc. hybrid): engine size (cc)	Advisory Fuel Rate
1400cc or less	13p (minus 1p)
1401cc to 2000cc	15p (minus 1p)
Over 2000cc	24p (minus 2p)

Diesel (inc. hybrid): engine size (cc)	Advisory Fuel Rate
1600cc or less	12p (minus 1p)
1601cc to 2000cc	14p (minus 1p)
Over 2000cc	19p (-)

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