New advisory fuel rates announced – plus how the AFR system works

If you have to pay to refuel your fleet car when you drive for business, you've probably consulted the Government’s advisory fuel rates (AFRs) to work out how much you can claim back on expenses.

AFRs – given as pence-per-mile figures – are the recommended rates for reimbursing employees' fuel bills. They can also be used to pay your company back for fuel you've used doing private journeys in your company car.

The Government publishes new AFRs each quarter, on March 1, June 1, September 1 and December 1. The regular updates allow HMRC to react reasonably quickly to fluctuations in fuel costs. The most recent update applied from March 1, 2024, but you can use the previous rates for up to a month from the date of each update.

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In the first 2024 update, the AFR for electric cars – known as the advisory electric rate (AER) stayed at 9p per mile. It dropped from 10p in December, reflecting a small decrease in the energy price cap, but remains much more than EV drivers could claim in early 2023. 

Figures for some petrol, diesel and liquefied petroleum gas (LPG) cars have changed, but only by a penny or two each way. Here are the rates in full:

Advisory fuel rates for petrol and LPG cars from March 1, 2024

Advisory fuel rates for diesel cars from March 1, 2024

Do advisory fuel rates apply to hybrid and plug-in hybrid cars?

Yes. AFRs do not currently differentiate hybrid and plug-in hybrid (PHEV) cars from regular petrol or diesel models with the same fuel type and engine size, even if the electrical hybrid tech makes them much more fuel-efficient.

However, the rates are advisory rather than compulsory – hence the name. If your employer can prove that the car you’re using is more economical than the Government's rates assume, it can pay you less than the AFR stipulates. 

Conversely, if you run a fleet car that is thirstier than the AFR rate, and your employer can prove that to HMRC, you could end up with a reimbursement rate above that of the AFR.

In reality, simplicity is best, which is why most employers choose to stick to the AFR. Paying above these rates could lead to a business having to pay Class 1A National Insurance, with the excess payment being treated as taxable profit.

Read more: How company car tax works

How are advisory fuel rates calculated?

HMRC works out what the AFR should be by taking the average cost of a litre of unleaded or diesel fuel, and crunching these numbers with the official average economy figures of new cars supplied to businesses, depending on engine size.

As for LPG, HMRC takes the average cost from the AA website and works out the advisory fuel rate, assuming that a car running LPG is roughly 20% less economical than it would normally be (LPG is less energy-dense than conventional fuels).

Once accurate fuel-per-mile costs are worked out for every fuel and engine-size category, these are rounded up or down to the nearest penny, which becomes the AFR.

Read more: Which fuel is best for a company car?

How much do I pay for fuel if I use my company car for a private journey?

Repaying the fuel used on a private journey is worked out by assuming the cost per mile is the same as it would be for a business trip. In short, the same AFR applies, in reverse (you pay your company, rather than it paying you).

Of course, there’s a way around all this: if your employer chooses to pay for all of your fuel. Some companies do that by agreement, but not all.

Read more: Can I use my company car for private journeys?

Do I claim the AFR if I use my own car for a business trip?

No, advisory fuel rates do not apply – you want the approved mileage allowance rate.

That tends to be higher because it takes into account wear and tear on your vehicle as well as fuel costs.

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