HMRC advisory fuel rates for company car users from 1 December

HMRC has published the latest advisory fuel rates (AFR) for company car users, effective from 1 December 2021, increasing mileage rates by between 1p and 2p per mile for all petrol and diesel vehicles, while the electric car rate also increases

The advisory fuel rates that apply from 1 December 2021 have been increased by 1p per mile for petrol and diesel vehicles with engines of 1400-2000cc reflecting a sharp increase in fuel prices over the last quarter, while 2000cc petrol vehicles see a 2p increase to 22p per mile and diesel vehicles are up a penny to 16p per mile. The previous rates, effective September 2021, can be used for up to one month from the date the new rates apply.

The rates only apply in the following circumstances:

  • reimburse employees for business travel in their company cars; or
  • require employees to repay the cost of fuel used for private travel.

These rates cannot be used in any other circumstances. If the rates are used, it is not necessary to apply for a dispensation to cover the payments made.

The advisory electricity rate for fully electric cars has also increased to 5p per mile, up from 4p. Electricity is not a fuel for car fuel benefit purposes.

When employees are reimbursed for business travel in their company cars, HMRC will accept there is no taxable profit and no Class 1A national Insurance to pay.

Advisory fuel rates from 1 December 2021

Engine sizePetrol – amount per mile (previous)LPG – amount per mile (previous)
1400cc or less13p (12p)9p (7p)
1401cc to 2000cc15p (14p)10p (8p)
Over 2000cc22p (20p)15p (12p)

 

Engine sizeDiesel – amount per mile
1600cc or less11p (10p)
1601cc to 2000cc13p (12p)
Over 2000cc16p (15p)

Hybrid cars are treated as either petrol or diesel cars for this purpose.

HMRC reviews rates quarterly on 1 March, 1 June, 1 September and 1 December.

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