HMRC’s Advisory Fuel Rates (AFR) 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 June 2018 are shown in the tables below.  This also shows the movement of rates in the last 12 months and highlights in red the changes from the rates that applied from March 2018:

Petrol and LPG

Diesel

Supporting guidance

HMRC documents the way that these rates are calculated.

They are based on ‘Applied Miles per Gallon’ for different engine sizes.  This is a figure based on manufacturers’ miles per gallon information, reduced by 15% to take into account real driving conditions and lower fuel economy for older cars.  The LPG miles per gallon information is assumed to be 20% lower than for petrol due to ‘lower volumetric energy density’.

Having identified the Applied Miles per Gallon figure, they are then compared to the latest petrol and diesel fuel prices from the Department for Business, Energy & Industrial Strategy (BEIS) and the LPG (UK Average) fuel price from the Automobile Association (AA).  The fuel prices used are:

  • Petrol – 560.40p per gallon (123.30p per litre)
  • LPG – 274.60p per gallon (60.40p  per litre)
  • Diesel – 577.30p per gallon (127.00p  per litre)

The above information is contained on the Gov.UK Website in four separate places:

  • ‘Current rates’
  • ‘When you can use AFRs’
  • ‘How AFR rates are calculated’
  • ‘Previous rates’

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