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Advisory Fuel Rates from 1 December 2016

By the HMRC

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Updated 28 November 2016

Contents

1. Advisory Fuel Rates from 1 December 2016

These rates only apply to employees using a company car.

Advisory Fuel Rates from 1 December 2016

These rates apply from 1 December 2016. You can use the previous rates for up to one month from the date the new rates apply.

Engine size Petrol - amount per mile LPG - amount per mile
1400cc or less 11 pence 7 pence
1401cc to 2000cc 14 pence 9 pence
Over 2000cc 21 pence 13 pence
Engine size Diesel - amount per mile  
1600cc or less 9 pence  
1601cc to 2000cc 11 pence  
Over 2000cc 13 pence  

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

When you can use Advisory Fuel Rates

Updated 28 November 2016
Contents

1. Current rates

Current rates start from 1 December 2016.

2. When you can use the mileage rates

The rates only apply when you either:
• reimburse employees for business travel in their company cars
• require employees to repay the cost of fuel used for private travel
You must not use these rates in any other circumstances. If you use them correctly you will not need to apply for a dispensation to cover the payments you make.

2.1 Reimburse employees for business travel in their company cars

If you pay a rate per mile for business travel no higher than the AFR, for the particular engine size and fuel type, HM Revenue and Customs (HMRC) will accept there is no taxable profit and no Class 1A National Insurance to pay.
You can use your own rates which better reflect your circumstances if, for example, your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates.
If you pay rates that are higher than the advisory rates and can’t demonstrate the fuel cost per mile is higher, there is no fuel benefit charge if the mileage payments are solely for miles of business travel. Instead, you will have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.

2.2 Require employees to repay the cost of fuel used for private travel

If you have correctly recorded all miles of private travel and used the correct rate (or anything higher) to work out the cost of fuel used for private travel that the employee must repay to you, HMRC will accept there is no fuel benefit charge.
The advisory rates will not be binding where you can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile.

3. How rates are calculated
Rates are calculated based on fuel prices and adjusted miles per gallon figures.

4. Previous rates
Previous rates are available to check from 1 June 2012.