Latest HMRC Advisory Fuel Rates for company cars
HMRC has announced their new Advisory Fuel Rates (AFRs) for Employees and Directors using a company car.
Employees and Directors using a company car for private travel may be subject to a taxable fuel benefit if the company pays for their fuel. However, the taxable fuel benefit will not apply if all the private fuel is fully reimbursed by the Employee/Director using the Advisory Fuel Rates.
Alternatively, if the Employer’s policy is to not pay for any fuel for the company car, the Advisory Fuel Rates represent tax-free amounts that can be reimbursed to the Employee or Director for qualifying business journeys.
The rates from 1 September 2022 are summarised in the table below. Where there has been a change, the rate for the previous quarter is shown in brackets.
|1400cc or less||15p (14p)||9p|
|1600cc or less||14p (13p)|
|1401cc to 2000cc||18p (17p)||11p|
|1601 to 2000cc||17p (16p)|
|Over 2000cc||27p (25p)||22p (19p)||17p (16p)|
You can continue to use the previous rates for up to 1 month from the date the new rates apply.
Please note that for hybrid cars you must use the petrol or diesel rate and for fully electric cars the rate is 5p per mile.
Employees using their own car
Where Employees use their own car for business journeys, the tax-free reimbursement rate continues to be 45p per mile, plus 5p per passenger. Despite lobbying, this rate has not increased for nearly 10 years! The Employer can reclaim input VAT on such payments based on the figures in the above table. For example, if an Employee drives their own 1500cc car for business journeys and is reimbursed 45p per mile, then 18p per mile is deemed to represent the cost of petrol. The Employer may claim 3p per mile (1/6) as input VAT, provided the Employee submits a fuel receipt to support the claim.
For more information on fuel rates, please contact Martin Back on 023 8046 1232.