Advisory Fuel Rates for Company Cars
HMRC sets the Advisory Fuel Rates (AFRs) to guide employers in reimbursing employees for business travel in company cars. These rates ensure the reimbursements are tax-free, provided they accurately reflect the fuel costs incurred.
Employers will also use AFRs when employees repay the cost of fuel used for private travel in company cars.
Updated Rates from 1 September 2024
The AFRs vary based on the vehicle’s engine size and fuel type. The current rates are as follows:
| Engine Size (cc) | Petrol | Diesel | LPG |
| Up to 1400 | 13p | N/A | 11p |
| 1401 to 2000 | 15p | N/A | 13p |
| Over 2000 | 24p | 18p | 21p |
For fully electric cars, the advisory electricity rate is 7p per mile.
Applying the Rates
Employers should use these rates when:
- Reimbursing employees for business travel in their company cars.
- Calculating the amount of employees need to repay for fuel used during private travel.
Using the correct AFRs ensures that reimbursements are tax-free and that there’s no Class 1A National Insurance to pay on the amounts reimbursed.
Flexibility During Transitional Periods
Employers can use the previous rates for up to 1 month from the date any new rates apply.
If the actual cost of fuel is higher than the AFR due to less-fuel efficient vehicles, employers can reimburse at a higher rate, provided they can demonstrate that the higher rate better reflects the actual fuel costs.
Conversely, if a vehicle is more economical, employers can reimburse at a lower rate, ensuring that the reimbursement accurately covers the fuel costs.
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