Latest Advisory Fuel Rates (AFR) Update from HMRC ⛽
Attention all company car users and businesses! HMRC has just released the revised advisory fuel rates (AFR) for company car usage, effective from 1st June 2023. Notably, the AFR for diesel rates has been reduced, while unleaded rates remain unchanged. Additionally, there is a slight increase in LPG engine rates compared to the previous March 2023 rates.
Applicability and Transition Period
The new rates are applicable from 1st June 2023 onwards. However, you can continue to use the previous rates for up to one month after the new rates come into effect.
When Do the Rates Apply?
These rates specifically apply in the following scenarios:
1️⃣ Reimbursement of employees for business travel in their company cars.
2️⃣ Requirement for employees to repay the cost of fuel used for private travel.
These rates should not be utilized in any other circumstances. It is important to note that if you use these rates, there is no need to apply for a dispensation to cover the payments made.
Advisory Electricity Rate
Starting from 1st June 2023, the advisory electricity rate for fully electric cars remains unchanged at 9 pence per mile. Similar to the advisory fuel rates, this electric rate will now be reviewed on a quarterly basis.
Tax and National Insurance Implications
When employees are reimbursed for business travel in their company cars, HMRC recognizes that there is no taxable profit and no Class 1A National Insurance to be paid.
Advisory Fuel Rates from 1st June 2023
Engine Size - Petrol (per mile) [Previous Rate]
- 1400cc or less: 13p (13p)
- 1401cc to 2000cc: 15p (15p)
- Over 2000cc: 23p (23p)
Engine Size - LPG (per mile) [Previous Rate]
- 1400cc or less: 10p (10p)
- 1401cc to 2000cc: 12p (11p)
- Over 2000cc: 18p (17p)
Engine Size - Diesel (per mile) [Previous Rate]
- Up to 1600cc: 12p (13p)
- 1601cc to 2000cc: 14p (15p)
- Over 2000cc: 18p (20p)
Hybrid Cars
For the purpose of AFR, hybrid cars are treated as either petrol or diesel cars.
⏰ Regular Review Schedule
HMRC reviews these rates quarterly on the following dates: 1st March, 1st June, 1st September, and 1st December.
If you have any questions regarding issues surrounding employees who drive for work, we are here to provide support and guidance. Please don't hesitate to get in touch with Moe now for assistance.
Stay informed, stay compliant, and drive safely!
#HMRC #AdvisoryFuelRates #CompanyCars #BusinessTravel #TaxImplications #Compliance
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