The Advisory Fuel Rate is different to the rate at which companies can reimburse employees for business mileage in their own car which is known as the “approved mileage rate”.
The Advisory Fuel Rates apply to employees using a company car for business travel and are to be used in the following circumstances:
- When reimbursing employees for business travel in their company cars
- When employees need to repay the cost of fuel used for private travel.
HMRC recently updated the Advisory Fuel Rates with effect from 1 June 2022 as follows:
| Engine size | Petrol – rate per mile (increase on previous rate) | Liquid Petroleum Gas – rate per mile |
| 1400cc or less | 14p (+1p) | 9p |
| 1401cc to 2000cc | 17p (+2p) | 11p |
| Over 2000cc | 25p (+3p) | 16p |
| Engine size | Diesel – rate per mile (increase on previous rate) |
| 1600cc or less | 13p (+2p) |
| 1601cc to 2000cc | 16p (+3p) |
| Over 2000cc | 19p (+3p) |
Fully electric vehicles remain at five pence per mile and hybrid cars are treated as either petrol or diesel.
Since 2011 the approved mileage rate for cars has been 45p per mile for up to 10,000 business miles per year and 25p per mile in excess of 10,000 business miles per year. The approved mileage rate is applied to reimburse running costs (including fuel) where individuals travel on business using their own cars.
With the rising cost of fuel and other motoring costs as well as the general cost of living, many are calling for these rates to be increased. Whether that will happen remains to be seen.
