HMRC have published the latest Advisory Fuel Rates (AFR) which take effect from the 1st September 2018.
These Advisory Fuel Rates are the recommended reimbursement rates, for employees reclaiming business travel, usually in company vehicles. These Advisory Fuel Rates, however, can also be used to calculate the fuel portion of a mileage claim. This is important when claiming VAT on mileage expenses.
The HMRC Advisory Fuel Rates are based on the engine size and fuel type of your car. Hybrid cars are treated as either petrol or diesel cars for this purpose. The highest rate is for cars with large petrol engines (22 pence per mile), the lowest rate is for cars with small LPG engines (7 pence per mile).
HMRC updates the Advisory Fuel Rates quarterly to take account of changes in fuel prices. The latest rates are shown below and are valid from the 1st September 2018.
Advisory Fuel Rates – from 1st September 2018
|Engine size||Petrol – amount per mile||LPG – amount per mile|
|1400cc or less||12 pence||7 pence|
|1401cc to 2000cc||15 pence||9 pence|
|Over 2000cc||22 pence||13 pence|
|Engine size||Diesel – amount per mile|
|1600cc or less||10 pence|
|1601cc to 2000cc||12 pence|
|Over 2000cc||13 pence|
Hybrid Fuelled Cars
- Drivers of petrol/electric hybrid cars should use the petrol rates
- Drivers of diesel/electric hybrid cars should use the diesel rates
Advisory Electricity Rate
HMRC have published, for the first time, the Advisory Electric Rate (AER). This rate is for pure electric company cars, and the rate is 4ppm.
HMRC accept that a company who pays up to 4 pence per mile, when reimbursing their employees for business travel in a fully electric company car, are tax and National Insurance-free. This is just the same as the Advisory Fuel Rates which are deemed tax and National Insurance-free.
The use of Advisory Fuel Rates in calculating the VAT on Mileage expenses
The HMRC Advisory Fuel Rates can also be used to calculate the fuel portion of your mileage claim. This is important if you drive your own car for business and claim VAT on your mileage expenses.
The formula for calculating the VAT on mileage using the Advisory Fuel Rate is:
VAT = fuel portion / 6
VAT on mileage = (advisory fuel rate x business miles claimed) / 6
If you want to find out more about claiming VAT on your mileage expenses see our blog about this called VAT on mileage expenses – how to claim.
To conclude, the changes to the current Advisory Fuel Rates are:
- Petrol engine, 1400cc or less, increased by 1p per mile to 12p
- Petrol engine, 1401cc to 2000cc, increased by 1p per mile to 15p
- Diesel engine, 1601cc to 2000cc, increased by 1p per mile to 12p
- LPG engine, over 2000cc, decrease by 1p per mile to 13p
N.B. The Advisory Fuel Rates for earlier periods can be found at www.gov.uk
For Tripcatcher users, these rates are updated for you so there is nothing for you to do.
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