HMRC has published the latest advisory fuel rates (AFR) for company car users, effective from 1 March 2022, increasing mileage rates by between 1p and 2p per mile for all petrol vehicles, while diesel and electric car rates remain unchanged, says Sara White in Accountancy Daily
The advisory fuel rates that apply from 1 March 2022 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. Diesel vehicle rates remain unchanged, while LPG rates decrease by 1p per mile.
The previous rates, effective December 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 remains at 5p per mile. 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 March 2022
| Engine size | Petrol – amount per mile (previous) | LPG – amount per mile (previous) |
| 1400cc or less | 13p (12p) | 8p (9p) |
| 1401cc to 2000cc | 15p (14p) | 10p (10p) |
| Over 2000cc | 22p (20p) | 15p (15p) |
| Engine size | Diesel – amount per mile |
| 1600cc or less | 11p (11p) |
| 1601cc to 2000cc | 13p (13p) |
| Over 2000cc | 16p (16p) |
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.
If you have any questions regarding this or other company car queries, please don’t hesitate to contact the IN Accountancy Team who will be happy to help
