What are the advisory fuel rates?

Advisory fuel rates are released by HMRC to help calculate the value of a claim for the cost of fuel used to run a company car.

To qualify the cost of fuel can only be claimed back for business miles and not for private use which includes normal commuting to work. In addition a claim is only valid if you are not reimbursed or reimbursed less than the advisory fuel rates by your employer.

HMRC have created three different advisory fuel rate categories for petrol, diesel and LPG vehicles.

Hybrid company cars are not treated differently and are categorised as either a diesel or petrol.

Advisory fuel rates from 1 September 2022

How does HMRC work out the advisory fuel rates?

HMRC works with the car manufacturers to work out the mean miles per gallon (MPG). The most up to date petrol and diesel prices are also used and are provided by the Department for Business Energy and Industrial Strategy.

The advisory fuel rates are then set and reviewed by HMRC regularly usually on a quarterly basis on the 1 March, 1 June, 1 September, and 1 December.

Advisory fuel rates and AMAP rates

The advisory fuel rates are less than the AMAP rates which are used if you use your own car for work purposes.

HMRC approves a higher mileage rate for using your own car because of the additional car maintenance costs suffered from using your own vehicle.

The AMAP rates are .45p per mile for the first 10,000 miles and .25p per mile thereafter and should only be used when claiming mileage tax relief for using your own car for work.

Advisory fuel rates and electric company cars

Electricity isn’t classed as a fuel by HMRC for company car fuel benefit reasons. Electric cars have their own rate called the advisory electricity rate which is currently fixed at 8p per mile for all electric company cars.

If you have an electric company van HMRC do not class personal use as a benefit in kind meaning no fuel benefit charge will be applicable.