Company Car Mileage Rates – September 2023

COMPANY car drivers will have new car mileage rates to use from the beginning of September 2023.

Known as the Advisory Fuel Rates (AFRs), these are used whether you drive an electric car or a diesel or petrol company car.

For drivers of traditional petrol and diesel company cars, they are banded by engine size, with each banding given a pence per mile cost.

For drivers in an electric company car, the rates have increased by 1p per mile to reflect the continuing high cost of electricity. 

Advisory Electric Rate (AER) For Electric Company Cars

Rates applicable from 01 September 2023

For diesel drivers the charges have have increased  increased by 1p to 19ppm for those cars with an engine size over 2,000cc.

Advisory Fuel Rates For Diesel Company Cars

Rates applicable from 01 September 2023

Petrol fleet cars see an increase of 1p to 16ppm for engines between 1,401-2,000cc and a 2p increase to 25ppm for over 2,000cc petrol models.

Advisory Fuel Rates For Petrol Company Cars

Rates applicable from 01 September 2023

These AFRs can be used to claim back fuel costs from your employer for the number of business miles you have completed in a calendar month.

Alternatively, if your business pays for all your fuel or electricity – say on a fuel card – it can be used by payroll to deduct your private mileage.

What If I Drive A Hybrid?

If you drive a hybrid company car, you use the figure for the car’s engine. So a petrol hybrid, or a petrol plug-in hybrid, uses the petrol AFRs.

The rates are calculated by HMRC using figures supplied by the Business, Energy & Industrial Strategy (BEIS), as well as information on energy consumption supplied by the Department for Transport (DfT). They reflect the general movement of fuel or electricity costs across the quarter.

AFRs are reviewed quarterly in an effort to reflect fuel and energy costs. The next time the AFRs are  scheduled to be changed is 01 September.

Use AFRs To Avoid Paying Highly Expensive Free Fuel Tax

AFRs are designed to reimburse company car drivers for the fuel used on business trips. If they are not used correctly, drivers could be liable for Company Car Fuel Benefit, a tax on supplying drivers free fuel. Except the cost of the tax makes it anything but ‘free’. See HMRC’s Fuel Benefit Charges For Cars And Vans. You can find out the cost to you of using free fuel with this calculator from Comcar.