We previously provided you with an update on advisory fuel rates (AFR), what they are and what you need to know about them. And now, in September, the HMRC have released new advisory fuel rates you need to be aware of.
As a reminder, the advisory fuel rates, the tax-free amount employers can reimburse employees for mileage in petrol and diesel company cars.
The new rates reflect the rises in fuel prices over the past few months. However, it has not raised the Advisory Electric Rates for drivers of electric vehicles.
From the start of September, every rate has been increased, with the biggest changes for cars with diesel engines over 2,000cc, which have risen 3p to 22p. It means that this rate has now gone up 6p in the last two reviews.
These are the rates you can use:
From 1 September 2022
You can use the previous rates for up to one month from the date the new rates apply.
Petrol, by engine size & rate per mile:
1400cc or less, 15p
Over 2000cc, 27p
Diesel, by engine size & rate per mile:
1600cc or less, 14p
Over 2000cc, 22p
The Advisory Electricity Rate (AER) of 5ppm has not been increased, despite well-documented rises in the costs of electricity for both homeowners and businesses. The Association of Fleet Professionals, along with the British Vehicle Rental and Leasing Association are in the process of submitting evidence to HMRC in order to get the rate increased.
As an example, a 50 kWh EV charged in public at 50p per kWh, and achieving an efficiency of only 3 miles/kWh would run at 16 pence per mile - 11p more than the AER, and resulting in the driver incurring a shortfall of about £17 for a full charge.
At home, the same vehicle charging at 34p per KWh would cost 11p per mile, leaving a driver 6p out of pocket for every business mile they drive. That equates to a deficit of around £9 for a full charge.
Our MD of UK Fleet, Paul Holland, explains here how AFRs work, and what can be claimed.