In the latest announcement from HMRC, there have been some changes to the AFR. 

Petrol vehicles for displacements up to 1400cc increase by one pence per mile (ppm) while diesel and LPG vehicles remain the same as the June AFR rates. For vehicles between 1401cc and 1600cc, all fuel types remain the same as June. Displacements over 1601 see petrol and LPG vehicles remain the same as before but see diesel vehicles decrease by one. 

The AFR rates apply to all journeys on or after 1st September 2016 and for one month from the date of change, employers are able to choose to use either the previous or new current rates. Employers may, therefore make or require supplementary payments if they so wish, but are under no obligation to do either.

Use of AFRs (Advisory Fuel Rates)

AFRs can be used to negotiate dispensations for mileage payments for business travel in company cars.

They are meant to reflect actual average fuel costs at the time they are set and save time for both employers and HMRC by setting out some figures that can be used in the majority of cases. They give employers more certainty about what the mileage rates that they choose to apply mean for tax and National Insurance contributions (NICs).

The rates only apply where employers:

  • reimburse employees for business travel in their company cars
  • or require employees to repay the cost of fuel used for private travel

The rates are advisory only.

Current and past AFR rates can be seen here on Comcar at http://www.comcar.co.uk/afrs.

Information is also available on the HMRC website at https://www.gov.uk/government/publications/advisory-fuel-rates