Advisory Fuel Rates and Advisory Electricity rates for some drivers claiming back petrol, diesel and electric in company cars have been raised by HMRC.
From September 1, 2023, the diesel AFR for company cars with an engine size of more than 2,000cc was increased by 1ppm to 19ppm, while petrol engines of 1401cc to 2000cc rose by the same amount to 16ppm. Larger petrol engines over 2,000cc increased by 2ppm to 25ppm. All other petrol and diesel engine sizes stayed at the same rates as the previous quarter (see below).
The calculations for the September-November 2023 quarter were based on an average pence per litre price of 146.2p for petrol and 148.2p for diesel. However fuel prices have been rising in recent weeks, with Government figures showing petrol averaged 151.7p per litre and diesel 154.7p in the first week of September.
The increases have been put down to a reduction in oil supply from Russia and Saudi Arabia that is likely to continue until December, pushing the price of oil above $90 a barrel for the first time this year.
Conversely, while the overall price of domestic electricity is dropping in the UK, with OFGEM setting a lower price cap in October, HMRC has increased the Advisory Electricity Rate for electric company cars by 1p, to 10ppm.
However, experts suggest that even the new AER rate will not be high enough for many drivers. We analysed data from July 2023 and found those drivers without access to home charging, or who need to use public charging on the road, spend 23 pence per mile on average, meaning they are 13p per mile out of pocket.
Ashley Tate, Managing Director of Allstar Chargepass UK, said: “The AER quite simply isn’t fit for purpose. The Government has increased the rate to try and create a fairer system, but there are too many variables to factor in.
"For example, home charging costs hinge on your specific tariff. Those on higher tariffs do not have their charging expenses covered by AER, while those on lower tariffs, like Octopus Energy’s Intelligent tariff, receive reimbursements exceeding energy costs.
"If you’re charging at a public charge point, the amount you’re charged depends on where in the country you are, and what time it is, and our insights show that 100% of public charge points are above the AER. Under the current system, both drivers and businesses can end up out of pocket.
Advisory Fuel Rates From 1 September 2023
Engine Size: Petrol
1400cc or less13 pence
1401cc to 2000cc 16 pence
Over 2000cc 25 pence
Engine Size: Diesel
1400cc or less12 pence
1401cc to 2000cc 14 pence
Over 2000cc 19 pence
All cars: 10 pence
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