What is an advisory fuel rate?
What is an advisory fuel rate?
Advisory Fuel Rates (AFRs) are the rates set by government to assist businesses in reimbursing or being reimbursed for fuel costs of company cars. Hybrid cars are to be treated as either petrol or diesel for the purpose of fuel rates, whilst a flat rate of 4p per mile has been introduced for 100% electric cars.
How much can I claim for fuel in a company car?
The basic rules as of 2020/21 say you can claim back 45p per mile for the first 10,000 miles you travel for work in a year. After that, the rate drops to 25p. These are called Approved Mileage Allowance Payments (AMAP).
What is HMRC mileage rate?
How much is the HMRC 2022 mileage allowance?
| Type of Vehicle | 10,000 miles | 10,000 + miles |
|---|---|---|
| Cars and vans | 45p | 25p |
| Motorcycles | 24p | 24p |
| Bikes | 20p | 20p |
Can you still claim 45p per mile for an electric car?
When using a privately owned electric vehicle at work, it is possible to claim for mileage too. These are known as AMAP rates and just like diesel or petrol cars, the amount that can be claimed is 45p per mile tax-free for the first 10,000 business miles.
How are advisory fuel rates calculated?
The formula for calculating the VAT on mileage expenses using the Advisory Fuel Rate is:
- Fuel portion = advisory fuel rate x business miles claimed.
- VAT = fuel portion / 6.
- VAT on mileage = (advisory fuel rate x business miles claimed) / 6.
Who pays for fuel in a company car?
Many employers have an arrangement with their company car drivers to obtain reimbursement of any private fuel provided. Usually, the employee must reimburse the employer for private fuel included in petrol bills paid by the employer. Otherwise, the employee may face a tax charge.
How is company car fuel benefit calculated?
The fuel benefit charge is calculated by multiplying the fuel benefit charge multiplier by the car’s appropriate percentage; that is the CO₂ emissions derived percentage used to calculate the car benefit charge, including any diesel supplement.
Is NHS mileage taxable?
The maximum allowance payable is set out in the NHS Terms and Conditions Handbook. 9.1 Mileage reimbursement is a ‘payment’ from your employer that can be subject to tax and national insurance deductions on the whole amount.
When do advisory fuel rates apply for company cars?
Company car advisory fuel rates that apply from 1 September 2021 have been published. HMRC has issued details of the latest Advisory Fuel Rates (AFRs) for Company Cars. Rates are to be applied from 1 September 2021. For one month from the date of change, employers may use either the previous or new current rates, as they choose.
How are advisory electricity rates calculated for electric cars?
The advisory electricity rate for fully electric cars is calculated using published consumption rates, adjusted to reflect real driving conditions and the average cost of electricity. The advisory fuel rates are worked out from the fuel prices in these tables.
What are HMRC fuel rates and how do they work?
HMRC fuel rates are advisory in nature. The businesses are not bound to use them. They can choose to use the rates that reflect their respective circumstances. If the employer pays employee at a rate LESS THAN or EQUAL to advisory fuel rates, then HMRC accepts that there isn’t any taxable profit and no Class 1A National Insurance to pay.
What is the VAT rate on fuel?
The current VAT rate on fuel is 20%. So, as the fuel portion already includes VAT, the VAT portion will be calculated by multiplying 1/6 with fuel cost. The company will reimburse employees with £1,200 and reclaim VAT amounting to £200.
