New advisory fuel rates published by HMRC

 Published 28th February 2023
General Guides  HMRC / Tax 

The Advisory Electricity Rate (AER) has increased by a penny per mile according to new figures published by HMRC which come into effect from 01 March 2023.

The new Advisory Electricity Rate (AER) is now 9 pence per mile (ppm), reflecting sustained higher domestic and commercial electricity prices over the past few quarters. AFRs and AERs are used by company car drivers to calculate fuel costs when claiming back from their employer. The increased price per mile means drivers are less likely to be out of pocket when claiming back driving mileage for reimbursement. At the same time as an increase in the AER, AFRs have generally come down to track with gradually falling fuel prices. Diesel rates have dropped by 1-2ppm depending on engine size, and petrol rates have fallen by 2-4ppm. These all reflect lower prices at the pumps than three months ago, where fuel costs were reaching record highs in some areas.

Electric: fully-electric Advisory Fuel Rate (AFR)
All models 9 pence (plus 1p)

Diesel (inc. hybrid): engine size (cc) Advisory Fuel Rate (AFR)
Up to 1,600cc 13 pence (minus 1p)
1,601cc - 2,000cc 15 pence (minus 2p)
Over 2,000cc 20 pence (minus 2p)

Petrol (inc. hybrid): engine size (cc) Advisory Fuel Rate (AFR)
Up to 1,400cc 13 pence (minus 2p)
1,401cc - 2,000cc 15 pence (minus 3p)
Over 2,000cc 23 pence (minus 4p)

HMRC reviews AFRs every quarter, in an effort to keep reimbursement figures in line with general costs. From this coming quarter, AERs are being calculated in a different manner, using a broader spread of data.

Previously, business mileage has been calculated based on annual figures from the Department for Business, Energy, & Industrial Strategy (BEIS), and the official electric energy consumption figures for each m model provided by the Department for Transport (DfT).

Now, HMRC is incorporating figures from the Office for National Statistics' (ONS) quarterly index for domestic electricity - a figure that forms part of the Consumer Price Index - as well as the previous data sets.

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