HMRC increases Advisory Fuel Rates for most cars as fuel costs rise

HM Revenue and Customs (HMRC) has increased its mileage rates except those for small diesel cars in a series of changes to its new Advisory Fuel Rates (AFRs) in line with the rising cost of fuel across the UK.

Pump prices have reached a new year high in recent weeks due to the rising price of oil on the world markets linked to shortages of supply.

The motoring organisation, the RAC, said that the average price of petrol rose by 5.44p a litre in April making it the second worst monthly rise since 2000, and the third monthly increase in a row, adding £3 to the cost of filling up an average family car.

Data from RAC Fuel Watch showed a litre of unleaded shot up from 122.62p to 128.06p as retailers passed on wholesale price increases driven by a 5% jump in the cost of a barrel of oil which went up more than $3 to $72.50, having hit a high of $74.38 earlier in the month.

It means April 2019 was officially one of the bleakest months for petrol prices in nearly 20 years. And prices in May have continued the upward trend. The RAC Fuel Watch is now showing the average price of diesel is at 135.51pence per litre, that of unleaded at 130.60ppl, super unleaded at 142.22ppl and LPG at 67.90ppl.

RAC Fuel Watch also showed that the average difference between petrol and diesel wholesale prices was only a penny throughout April, yet the retail price of diesel was an average of 6p a litre more expensive than petrol throughout the month – showing the extent that petrol retailers are cashing in.

In response to the rising pump prices, HMRC has now increased its fuel rates with effect from June 1, valid for the next three months.

The rates are relevant as they are used by organisations to reimburse company car drivers for fuel used in incurring business, rather than private mileage. Companies can use the old rates for up to one month from the date the new rates apply.

Under the new AFR rates thereare a number ofchanges. Petrol cars with an engine of 1,400cc or less have a new rate of 12ppm, while those with an engine from 1,400-2,000cc and over 2,000cc have a rate of 15ppm and 22ppm, respectively.

The rate for diesel cars with an engine of 1,600cc or less stays the same at 10ppm, while those with an engine from 1,600-2,000cc and over 2,000cc increase by a penny to 12ppm and 14ppm, respectively.

At the same time, the rate for aLPG vehicle with an engine of 1,400cc or less increases to 8ppm, and for LPG vehicles with an engine from 1,401-2,000cc goes up to 9ppm. LPG vehicles with an engine above 2,000cc will see an increase from 13 to 14ppm.

The advisory electricity rate (AER) for plug-in cars, first introduced in September 2018, remains unchanged at4ppm.

The company car mileage reimbursement rates are based on current petrol and diesel prices from the Department for Energy and Climate Change, with the LPG taken from the UK average price from the AA website in the previous month.

The new rates are as follows, although employers can use the previous rates for up to one month from the date the new rates apply.

The rates below tookeffect from June 1, 2019.

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Previous rates, valid from March 1,2019, are as follows: