In an update for businesses and employees alike, HMRC has revised the advisory fuel rates (AFRs) for company car drivers. These changes, effective from 1st June 2024, will impact all journeys where employees claim back fuel costs from their employer. It is essential for companies to stay informed about these updates to ensure compliance and accurate reimbursement processes.
Key Points of the Update:
- Revised AFRs: HMRC has updated the advisory fuel rates, which are reviewed quarterly. These rates are crucial for reimbursing employees for business travel in company cars.
- Applicability: The revised rates apply in two main scenarios:
- When employers reimburse employees for business travel using company cars.
- When employees are required to repay the cost of private travel in company cars.
Why This Matters:
For Employers:
Staying compliant with HMRC’s AFRs is critical to avoid any discrepancies. Accurate reimbursement ensures that employees are fairly compensated for their business travel expenses without overburdening the company’s finances.
For Employees:
Understanding the revised rates helps employees accurately claim their fuel expenses and ensures they are not out-of-pocket for business travel. It also clarifies their obligations when it comes to repaying costs for private travel.
Next Steps:
- Review and Adjust Policies: Employers should review their current reimbursement policies and adjust them according to the new AFRs.
- Communicate with Employees: Ensure that all employees are aware of the new rates and understand how to claim their expenses correctly.
- Stay Informed: Since these rates are reviewed quarterly, it is important to stay updated on any further changes to avoid non-compliance.
Updated Advisory Fuel Rates from 1 June 2024
The advisory fuel rates are worked out from the fuel prices in these tables.
Petrol
Engine size (cc) | Mean MPG | Fuel price (per litre) | Fuel price (per gallon) | Rate per mile | Advisory fuel rate |
---|---|---|---|---|---|
Up to 1400 | 49.5 | 149.5 pence | 679.8 pence | 13.7 pence | 14 pence |
1401 to 2000 | 42.1 | 149.5 pence | 679.8 pence | 16.2 pence | 16 pence |
Over 2000 | 26.7 | 149.5 pence | 679.8 pence | 25.5 pence | 26 pence |
Diesel
Engine size (cc) | Mean MPG | Fuel price (per litre) | Fuel price (per gallon) | Rate per mile | Advisory fuel rate |
---|---|---|---|---|---|
Up to 1600 | 56.7 | 157.6 pence | 716.6 pence | 12.6 pence | 13 pence |
1601 to 2000 | 48.0 | 157.6 pence | 716.6 pence | 14.9 pence | 15 pence |
Over 2000 | 36.3 | 157.6 pence | 716.6 pence | 19.7 pence | 20 pence |
LPG
Engine size (cc) | Mean MPG | Fuel price (per litre) | Fuel price (per gallon) | Rate per mile | Advisory fuel rate |
---|---|---|---|---|---|
Up to 1400 | 39.6 | 98.3 pence | 446.9 pence | 11.3 pence | 11 pence |
1401 to 2000 | 33.7 | 98.3 pence | 446.9 pence | 13.3 pence | 13 pence |
Over 2000 | 21.3 | 98.3 pence | 446.9 pence | 21.0 pence | 21 pence |
Electric
From 1 June 2024, the advisory electric rate for fully electric cars will be 8 pence per mile.
Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.
The advisory fuel rates for petrol, LPG and diesel cars are shown in these tables.
You can use the previous rates for up to 1 month from the date any new rates apply.
From 1 June 2024
Engine size | Petrol — rate per mile | LPG — rate per mile |
---|---|---|
1400cc or less | 14 pence | 11 pence |
1401cc to 2000cc | 16 pence | 13 pence |
Over 2000cc | 26 pence | 21 pence |
Engine size | Diesel — rate per mile |
---|---|
1600cc or less | 13 pence |
1601cc to 2000cc | 15 pence |
Over 2000cc | 20 pence |
Electric — rate per mile |
---|
8 pence |
For detailed information on the revised rates and to see how they may affect your business, you can visit the official HMRC website.
HB Accountants are here to help you and your business. We keep businesses and invidiuals informed, keep you and or your business compliant. If you would like to speak to us about how we can help you or your business, get in touch with us on 01992 444466..
The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any error.
Read our latest updates here
- Get ahead for the new year – 8 accountancy tasks to tackle nowWhile it is incredibly tempting to wind down in the days leading up to Christmas and take it easy between Christmas and the New Year celebrations, it really is the perfect time to ensure that your accounts are in tip top shape.
- Take the Stress Out of Your Self-Assessment Tax ReturnAs the self-assessment tax return deadline looms, freelancers, sole traders, and ‘solopreneurs’ across the UK are bracing themselves for what can feel like one of the most daunting tasks of the year. If you’re already feeling the pressure, you’re certainly not alone.
- HMRC Advisory Fuel Rates (AFRs) from 1st December 2024Advisory fuel rates (AFRs) are recommended reimbursement figures for drivers reclaiming business mileage, usually for those in company vehicles. The advisory fuel rate is updated by HMRC based on fuel prices every quarter, and publish revised figures if required in late February, May, August and November each year
- Accounting for ChristmasAs we leap towards the start of the festive season, with Christmas only a few weeks away (sorry!), we are sure that marketing and people teams are full speed ahead with planning Christmas parties and finding ways to to thank everyone for their hard work and loyalty over the past year. This means it is … Continue reading
- Solving a Finance Director’s Worst Nightmares: Strategies to mitigate or prevent them from occurringFinance professionals are not only responsible for financial transactions and reporting, they are directly involved in the operation of their organisations; providing strategic direction and high-level decision making. However, with this expanded responsibility and new technology, there comes new challenges.