Many advisory fuel rates (AFR) will be cut from June 2025 following HMRC’s latest review. These rates are assessed on a quarterly basis and act as recommended reimbursement amounts for drivers reclaiming business mileage, usually for those in company vehicles.
Diesel:
Fleet News reports that AFRs for diesel company cars have stayed the same apart from a penny decrease to the rate for a car with an engine size of up to 1,600cc, which will fall from 12 pence per mile (ppm) to 11ppm.
Petrol:
Two changes have been recommended to petrol rates from the last quarter. The AFR for petrol vehicles with an engine size from 1,401-2,000cc was cut from 15ppm to 14ppm.
The AFR for petrol vehicles with an engine more than 2,000cc was also cut by a penny, from 23ppm to 22ppm.
For models up to 1,400cc, the rate remains unchanged at 12ppm.
A more complete picture of changing and existing rates, including LPG and electric vehicles can be found on HMRC’s advisory pages.
Advisory fuel rates differ from Mileage Allowance Rates. The latter applies to employees using their own car for work and is designed to cover the costs of fuel and wear and tear for business trips. Advisory fuel rates apply where the individual is provided with a company car. In this instance, a mileage claim can be made for business travel to cover the cost of fuel where this is paid for by the employee. Different rules can apply if the company pays for fuel.
According to the RAC, AFRs are in place to assist companies in sticking to tax rules and Class 1A National Insurance costs in relation to fuel for company cars.
IAM RoadSmart Director of Policy and Standards Nicholas Lyes said:
“We know how sensitive fuel prices can be for businesses, so these recommended changes will make a modest difference.
“More broadly, a gradual decline in the wholesale cost of oil in recent weeks coupled with Sterling strengthening against the US dollar has translated into falling pump prices which will provide relief to businesses and individuals alike.”
To give your drivers a comprehensive guide on maximising fuel economy, consider our flagship on-road training course – Driving for Work. The course is delivered in your drivers’ own car, with a highly experienced Approved Driving Instructor – and includes a module specifically targeted at driving efficiently. For more information, please get in touch.
