HMRC has announced adjustments to the Advisory Fuel Rates (AFRs) have been amended from 1 June 2024. The rates are intended for use only where employers either reimburse employees for business travel in their company cars or require employees to repay the cost of fuel used for private travel. 

These vary depending on the fuel type and the car's engine size. The rates for petrol and diesel have been increased, whereas the advisory rate for fully electric vehicles has been reduced, reflecting the latest developments in the automotive and energy industries.

Starting on 1 June 2024, the advisory rates for diesel engines will rise by 1p per mile, petrol between 1p – 2p per mile, whereas the rate the liquid petroleum gas (LPG) will remain the same. The advisory electricity rate for fully electric vehicles has been reduced from 9p to 8p per mile, signifying a minor reduction in the cost of operating electric vehicles (EVs).

Advisory fuel rates from June 1, 2024

Petrol

Engines up to 1,400cc - 14p
Between 1,401cc and 2,000cc - 16p
Over 2,000cc - 26p

Diesel

Engines up to 1,600cc - 13p
Between 1,601cc and 2,000cc - 15p
Over 2,000cc - 20p

LPG

Engines up to 1,400cc - 11p
Between 1,401cc and 2,000cc - 13p
Over 2,000cc - 21p

Electric

All EVs - 8p

Any hybrid vehicles are treated either as petrol or diesel vehicles for advisory fuel rates.

Advisory fuel rates, or AFR, are recommended rates set by HMRC for the purposes of reimbursing fuel costs in businesses that provide company vehicles.  AFR are set by the government each quarter. 

If employers pay a rate that is higher than the advisory rate and cannot demonstrate the cost per mile is higher, they must treat the excess as taxable income and as earning for Class 1 National Insurance purposes.

Whether you have questions, need support, or need guidance, reach out to your usual Jerroms contact or contact us.