HMRC increases AFRs for fossil fuel cars but delivers cuts for EVs
Most company car drivers claiming back the cost of fuel from their employers for business mileage can be paid more from June – except electric vehicle drivers.
The mix of good and bad news is contained in the latest Advisory Fuel Rates (AFRs) published by HM Revenue and Customs, effective from June 1, 2024.
Most drivers of fossil fuel cars can claim 1p extra, with drivers of larger petrol engined cars receiving a 2p increase per mile. Hybrid cars use either petrol or diesel advisory fuel rates.
In contrast, the official rate claimed by drivers of fully electric vehicles falls 1p per mile.
The reimbursement rate for electric vehicle drivers has fallen 20% since December, as the government responds to declining energy prices, which fell 27% in the first four months of this year.
The move has drawn criticism from some drivers and analysts because the rate does not cover the cost of plugging in at public charging points.
According to data from Zapmap, typical public recharging rates vary from 57-80p/kWh, depending on the speed of the charger. This would cost drivers who average 4 miles per kWh around 14-20 pence per mile.
The average domestic electricity rate is 25p/kWh, costing the same driver just over 6p per mile if they charged their vehicle at home.
The fuel 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, it must be able to prove its fuel cost per mile is higher. If it can’t, then it will have to treat any excess payment 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.
New AFRs from 01 June 2024
| Petrol (inc. hybrid): engine size (cc) | Advisory Fuel Rate |
|---|---|
| 1400cc or less | 14p (increase of 1p) |
| 1401cc to 2000cc | 16p (increase of 1p) |
| Over 2000cc | 26p (increase of 2p) |
| Diesel (inc. hybrid): engine size (cc) | Advisory Fuel Rate |
|---|---|
| 1600cc or less | 13p (increase of 1p) |
| 1601cc to 2000cc | 15p (increase of 1p) |
| Over 2000cc | 20p (increase of 1p) |
| Fully electric | Advisory Fuel Rate |
|---|---|
| All cars | 8p (decrease of 1p) |
Source: HMRC - visit www.gov.uk/guidance/advisory-fuel-rates
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