HM Revenue and Customs (HMRC) has confirmed that three advisory fuel rates for drivers will be reduced starting from 1 September. These quarterly reviews by HMRC provide updated guidance on fuel reimbursement rates for businesses and employees using company vehicles for work purposes.
The forthcoming changes will affect the following rates:
- Diesel cars with engine sizes between 1,601cc and 2,000cc will see a reduction from 17p per mile to 16p per mile.
- Diesel models with engines between 1,601cc and 2,000cc will also be cut from 23p per mile to 22p per mile.
- Liquefied Petroleum Gas (LPG) vehicles with engine sizes over 2,000cc will experience a decrease from 21p per mile to 20p per mile.
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These advisory fuel rates are designed to help employers fairly reimburse employees for business travel in company vehicles and to assist employees in repaying fuel costs for private use. By reflecting current fuel prices for petrol, diesel, LPG, and electric vehicles, HMRC ensures that the rates remain relevant and simplify the process of fuel expense claims.
Regular updates to these rates align with fluctuations in fuel costs and improvements in vehicle efficiency. For employers, the Advisory Fuel Rates offer a straightforward method to handle mileage reimbursements without the need to calculate fuel expenses for each journey individually.
The RAC explained that the AFRs assist businesses in managing fuel cost reimbursements or repayments associated with company cars. They apply where companies reimburse employees for business mileage or where employees reimburse companies for private mileage using company cars.
By adhering to HMRC’s Advisory Fuel Rates, companies can streamline their administrative processes and maintain compliance with tax regulations, reducing the likelihood of errors or issues during audits.