Self employed advisory fuel rates guide

We cover the basics on Advisory Fuel Rates, including the definition, current AFR rates and how the calculations work.

By

Chris Andreou

Self employed advisory fuel rates guideSelf employed advisory fuel rates guide

What are advisory fuel rates?

Advisory fuel rates are recommended repayment amounts a company can use when reclaiming the fuel element on business mileage.

The rates are used to calculate:

  • How much employers should reimburse employees for business travel using the company car
  • How much employees need to repay employers for private travel using the company car
  • The VAT you can claim back on business mileage using your personal vehicle

Advisory fuel rates are recommended repayment amounts a company can use when reclaiming the fuel element on business mileage

The rates are used to calculate: 

  • How much employers should reimburse employees for business travel using the company car
  • How much employees need to repay employers for private travel using the company car
  • The VAT you can claim back on business mileage using your personal vehicle

What are the advisory fuel rates?

Current Advisory Fuel Rates
Current Advisory Fuel Rates

Additional points to note

  • The rates indicated in the final column are for fully electric cars. For hybrid cars, refer to the petrol or diesel rate. Electricity is not considered to be a fuel for car fuel benefit purposes. 
  • These rates should not be used for vans. 
  • These rates apply from 1st June 2019. The previous rates can be used for up to one month starting from the date that the new rates apply. 
  • The rates are updated every quarter (March, June, September and December). The latest rates can be viewed on the HMRC website, and you can also refer to previous rates here. 
  • Record keeping requirements: You'll need to keep fuel receipts for your VAT records. Simplify your record keeping processes by using apps with receipt scanning and storing features, such as Shoeboxed or Expensify.

Advisory Fuel Rates Calculation

Here's an example:

Henry is an employee driving a petrol car with 1,600cc capacity. This is a company car, and it has been used for 10,000 business miles. 

The cost of fuel is:  10,000 x 15p = £1,500 (inc VAT at 20%)

The VAT portion of the cost is: £1,500/ 120 = 12.5 

12.5 x 20 = £250

Using this example, £250 of VAT can be claimed on HMRC on the employer's VAT return.

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