Advisory fuel rates updated
Advisory electricity rate (AER)
The AER applies to the reimbursement of business miles in a full electric company car . It started at 4p per mile for the quarter commencing 1 September 2018. This was increased to 5p per mile from December 2021. With 5p per mile being woefully inadequate given the current electricity prices, the AER increased to 8p per mile from 1 December 2022.
Pro advice. Electricity is still not regarded as a fuel for tax and NI purposes. Therefore, when completing P11Ds for employees with electric company cars, you don’t need to include a car fuel benefit charge.
Pro advice. You can reimburse business mileage in a company car at a higher rate if you can justify that the electricity cost per mile is more than the AER. If you can’t, the excess is profit and subject to tax and Class 1 NI.
Pro advice. If an employee uses their own electric car for business, you can still reimburse them the standard 45p per mile up to 10,000 miles and 25p above that.
Advisory fuel rate (AFR)
AFRs can be used by employers in two situations, both applying where the employee has a company car:
- to reimburse employees for business travel, or
- to calculate the amount employees should repay where they are required to repay the cost of fuel used for private travel.
The AFRs are reviewed quarterly at the start of March, June, September and December.
1 December 2022 changes. There has been no change to the diesel rates but the petrol rates have gone down by 1p compared with the rates in the quarter ending 30 November 2022. For the full pence per mile rates effective 1 December 2022 (see Follow up ).
Pro advice. When new rates are announced, employers can choose to implement them immediately or use the old rate for up to one further month. This also shows the movement of rates in the last twelve months and highlights in red the change from the rates that applied from September 2022.
For the latest AFRs
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