Advisory Fuel Rates September 2024

When advising the Advisory Fuel Rates, it is necessary to consider two sets of rates:?

1. The Advisory Electricity Rate and
2. The Advisory Fuel Rates

This was first detailed in the August 2018 Employer Bulletin with the announcement that it would be published alongside the Advisory Fuel Rates and be kept under review.? There are some important points that are worth repeating:?

• The Advisory Electricity Rate does not apply to hybrid cars
• Electricity is still not regarded as a fuel for tax and National Insurance Contributions (NICs) purposes, e.g. car fuel benefit.? Therefore, it is applicable for reimbursement of business mileage in a company car
• The AER started as 4p per mile for the quarter starting 01 September 2018
• The AER should really be considered a concession by HMRC.? The Bulletin said that HMRC will ‘accept’ that the AER per mile in a fully electric company car is a rate that does not constitute any profit element for tax and Class 1 NICs
• Employers can pay at a higher rate if they can justify that the electricity cost per mile is more than the AER.? If they cannot, the excess is profit and subject to tax and Class 1 NICs

As per the announcement on 17 November 2022, this rate will be reviewed on a quarterly basis from 01 December 2022 so the following table continues to form a history of this rate over time:

The above information is contained on the Gov.UK Website within the document ‘Advisory Fuel Rates’.? It has been updated with the names of UK Government departments that are current.

HMRC’s Advisory Fuel Rates (AFRs) can be used by employers in two situations, both applying where the employee has a company car:?

1. To reimburse employees for business travel, or
2. To calculate the amount employees should repay where they are required to repay the cost of fuel used for private travel

The AFRs are reviewed quarterly at the start of March, June, September and December.? When new rates are announced, employers can choose to implement the new rates immediately or use the old rate for up to one further month.? The pence per mile rates effective 01 September 2024 are shown in the tables below.? This also shows the movement of rates in the last 12 months and highlights in red the change from the rates that applied from 01 June 2024:

The Advisory Electric Rate (AER) for fully electric cars is calculated using electrical price data from:?

• Department for Energy Security and Net Zero (DESNZ)
• Office for National Statistics (ONS)
• Car electrical consumption rates from the Department for Transport (DfT), and
• Annual car sales volumes to businesses (Fleet Audits average for the last 3 years)

For the September 2024 AER, the domestic electricity cost (per kilowatt-hour) was 26.42p with 3.59 miles per kilowatt-hour – 26.42 / 3.59 = 7.36p, rounded down to 7p.?

HMRC documents the way that the AFRs rates are calculated.??

They are based on ‘Mean Miles per Gallon’ (MPG) taken from manufacturers’ information, considering annual sales to businesses (Fleet Audits average 2021 to 2023).? The LPG miles per gallon information is assumed to be 20% lower than for petrol due to ‘lower volumetric energy density’.? ???

Having identified the MPG figure, HMRC then compare to the latest petrol and diesel fuel prices from the DESNZ and the LPG (UK average) is from the Automobile Association website:?

• Petrol – 143.4p per litre (652.0p per gallon)
• LPG – 98.3p per litre (446.9p per gallon)
• Diesel – 149.1p per litre (677.8p per gallon)

The calculations are then rounded – rounded down where the calculation ends with 0.5 or less and rounded up where the calculation is greater than 0.5.?

The above information is contained on the Gov.UK Website in one consolidated place.