The Advisory Fuels Rates are the amounts calculated by HMRC and should only be used for the purposes of:
- reimbursing employees for business travel in their company cars;
- setting rates that employees repay businesses for private fuel use on fuel cards;
- calculating input VAT to be claimed on Mileage Allowance Payments.
The Advisory Fuel Rates change each year but the effective rates from 1 December 2017 are:
|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||14 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.
Mileage Allowance Payments vs Advisory Fuel Rates
Mileage allowance payments are higher because they reflect wear and tear, insurance and car maintenance, so are used when people use their personal vehicles for business purposes. Advisory fuel rates relate to just fuel so are used where individuals have been provided with Company Cars and the business covers the cost of car maintenance and insurance.