The advisory fuel rate (AFR) is mainly of use in two situations. Firstly, where an employee personally pays for fuel used in their company car or van and claims reimbursement from their employer for business mileage. Secondly, where the business pays for all fuel, e.g. via a company fuel card or account at a petrol station, and requires the employee to reimburse it for the cost of their non-business mileage.
No tax or NI for employee
Using the AFR means a company doesn’t need to work out the actual cost of fuel per mile for each of its company vehicles. It can reimburse their employees safe in the knowledge that HM Revenue & Customs will accept that the payment doesn’t trigger a benefit-in-kind charge.
The table below shows the new rates that apply from 01 September 2021 with the previous rate in brackets where there is a change. Note that petrol hybrid cards are treated as petrol cars for this purpose.
If you would like to discuss your car policy, please contact us on 01752 752210.