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HMRC advisory fuel rates for company car users from 1 September 2023

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Peninsula Group, HR and Health & Safety Experts

(Last updated )

HMRC has published the latest advisory fuel rates (AFR) for company car users, effective from 1 September 2023, increasing the rate for electric cars.

The advisory fuel rates that apply from 1 September 2023 have increased by between 1p and 2p for larger size petrol engines, while diesel vehicle rate is up by 1p for 2000cc engines. There is a minimal increase in LPG engine rates compared with the September 2023 rates. 

The previous rates, effective from June 2023, can be used for up to one month from the date the new rates apply.

The rates only apply in the following circumstances:

  • reimburse employees for business travel in their company cars; or
  • require employees to repay the cost of fuel used for private travel.

These rates cannot be used in any other circumstances. If the rates are used, it is not necessary to apply for a dispensation to cover the payments made.

From 1 September 2023 the advisory electricity rate for fully electric cars will increase to 10 pence per mile. In line with advisory fuel rates, this electric rate is now being reviewed quarterly.

When employees are reimbursed for business travel in their company cars, HMRC will accept there is no taxable profit and no Class 1A national Insurance to pay.

Advisory fuel rates from 1 September 2023

Petrol/LPG:

  • Where the engine size is 1400cc or less, the petrol amount per mile will be 13p and for LPG will be 10p.
  • Where the engine size is 1401cc to 2000cc, the petrol amount per mile will be 16p and for LPG will be 12p.  
  • Where the engine size is over 2000cc, the petrol amount per mile will be 25p and for LPG will be 19p.

 Diesel:

  • 12p per mile where the engine size is up to 1600cc.   
  • 14p per mile where the engine size is 1601cc to 2000cc.       
  • 19p per mile where the engine size is over 2000cc.

Hybrid cars are treated as either petrol or diesel cars for this purpose.

HMRC reviews rates quarterly on 1 March, 1 June, 1 September and 1 December.

For more information on managing fuel issues at work, be sure to head to BrAInbox today for answers to questions like What do I do if my employee says they don't have enough petrol to get to work?

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