HMRC advisory fuel rates for company car uses from 1st of March 2023 (Updated)

HMRC has published the latest advisory fuel rates (AFR) for company car users, effective from the 1st of March 2023.

Fuel pump

The advisory fuel rates that apply from 1st of March 2023 have been increased for some classes of vehicles and decreased in others when compared to December. Since December 2022 petrol rates have decreased by one penny on petrol vehicles under 2000cc and two pence for vehicles over 2000cc. 

For diesel vehicle rates, engines 1600cc or less goes down one penny, for vehicles under 1601cc-2000cc rates decrease by 2 pence, for engines over 2000cc rates also decrease by 2 pence, while LPG rates decrease by one penny for 1401cc – 2000cc+. 1400cc and under will remain the same.

The rates only apply in the following circumstances:

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

These rates cannot be used in any other circumstances. If the rates are used, it is not necessary to apply for a dispensation to cover the payments made.

The advisory electricity rate for fully electric cars increases from 8p – 9p per mile. Electricity is not a fuel for car fuel benefit purposes.

When employees are reimbursed for business travel in their company cars, HMRC will accept there is no taxable profit and no Class 1A national Insurance to pay.

Advisory fuel rates from the 1st of March 2023

Engine sizePetrol – amount per mile (previous)LPG – amount per mile (previous)
1400cc or less13p (14p)10p (10p)
1401cc to 2000cc15p (17p)11p (12p)
Over 2000cc23p (26p)17p (18p)
Engine sizeDiesel – amount per mile
Up to 1600cc13p (14p)
1601cc to 2000cc15p (17p)
Over 2000cc20p (22p)

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

HMRC reviews rates quarterly on 1 March, 1 June, 1 September and 1 December.

Read our relevant article – Should you pay more than the approved mileage allowance?

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