HMRC advisory fuel rates for company car users from 1 March 2023

HMRC has published the latest advisory fuel rates (AFR) for company car users, effective from 1 March 2023, with a further rise in the electric car rate

The advisory fuel rates that apply from 1 March 2023 have decreased by between 1p and 3p for all petrol, diesel and LPG engine sizes compared with the December 2022 rates.

The previous rates, effective from December 2022, can be used for up to one month from the date the new rates apply.

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.

From 1 March 2023 the advisory electricity rate for fully electric cars will rise from 8 pence to 9 pence per mile. In line with advisory fuel rates, this electric rate will also be reviewed quarterly from 1 December 2022.

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 1 March 2023

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.

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