Activa Contracts

11 December 2024

HMRC Cuts Advisory Fuel Rates: What You Need to Know

As of December 1, HMRC has updated its Advisory Fuel Rates (AFRs), leading to some changes in the way businesses reimburse fuel costs for company cars. If you’re managing a fleet or using a company vehicle, it’s important to understand how these adjustments might impact you.

What’s Changed?

  1. Diesel Company Cars:
    • For vehicles with an engine over 2,000cc, the AFR drops from 18ppm to 17ppm.
    • Diesel cars in the 1,601-2,000cc range see a reduction from 14ppm to 13ppm.
    • For the smallest diesel cars (up to 1,600cc), the new AFR is 11ppm, down from 12ppm.
  2. Petrol Company Cars:
    • Cars up to 1,400cc will now be reimbursed at 12ppm, down from 13ppm.
    • The 1,401-2,000cc range also sees a decrease, dropping from 15ppm to 14ppm.
    • Petrol cars over 2,000cc will now have an AFR of 23ppm, a reduction from 24ppm.
  3. Electric & Hybrid Vehicles:
    • The Advisory Electricity Rate (AER) remains unchanged at 7ppm, so if your fleet includes electric vehicles, there’s no change here.
    • LPG vehicles see no changes either, maintaining rates of 11ppm for cars up to 1,400cc, 13ppm for 1,401-2,000cc, and 21ppm for cars above 2,000cc.
    • Hybrid cars will be treated as either petrol or diesel, depending on their engine size.

Why the Change?

These adjustments reflect current fuel price trends and are part of HMRC’s ongoing efforts to keep the AFRs in line with real-world fuel costs. As fuel prices fluctuate, the AFRs are recalculated to ensure fairness for both employers and employees when reimbursing fuel expenses.

It’s important to update your reimbursement rates accordingly. Lower AFRs may mean reduced fuel claims for your employees, but it can also help your company manage costs more effectively.

For businesses that are looking to stay on top of these changes, keeping your fleet’s fuel reimbursements in line with the latest AFRs is essential.

At Activa, we understand that staying on top of regulatory changes, like these HMRC AFR updates, can be time-consuming. That’s why we offer fleet management solutions that take care of the details so you don’t have to.