Advisory fuel rates are the recommended repayment amounts when you are reclaiming the fuel element on business mileage.
This applies to Standard Rate VAT registered companies only. They are used to calculate:
- The amount of VAT to reclaim on business mileage in a personal vehicle
- How much employers can reimburse employees for business travel in their company cars
- How much employees need to reimburse employers for private travel in their company cars.
HMRC reviews these rates every quarter.
What are the current Advisory Fuel Rates?
From 1st June 2019, the new Advisory Fuel rates are:
|1,400cc or less
|1,600cc or less
|1,401cc – 2,000cc
|1,601cc to 2,000.cc
*Fully electric cars only. Hybrid cars claim at the petrol or diesel rate. Electricity is not classed as a fuel for car fuel benefit purposes.
Source: Gov.uk website Advisory Fuel Rates
Using the advisory fuel rates above, you can calculate what percentage of the business mileage rate applies to fuel and calculate the VAT on that element.
How do Advisory Fuel Rates work in practice?
Example One – reclaiming VAT on mileage
Jane bought petrol and travelled 100 miles in her own car with an engine capacity of 2500cc.
Based on an advisory rate of 21p per mile, £21 would be attributed to the fuel (out of the overall £45 mileage claim). As this £21 is VAT inclusive (that is, £21 equals 120% of the fuel cost), the VAT element is calculated by dividing the figure by 6 giving an amount of £3.50.
Example Two – paying employer for private fuel on a company car
Jack made a round trip of 50 miles to see relatives in a diesel-engined company car with 1600cc capacity.
50 miles at an advisory rate of 9p per mile means Jack will be required to pay his employer £4.50 for the personal trip.
Example Three – claiming mileage on a company car
Helen bought diesel for her company car with an engine capacity of 1650cc, travelling 300 miles for work.
300 miles at an advisory rate of 11p per mile means the employer will reimburse Helen £33 for business miles.
We’ve got a simple spreadsheet that you can use to calculate the VAT elements of mileage. If you’re a Crunch client this will help you to know which line item amounts to put into your Crunch account. If you’re not a Crunch client you’re still welcome to use the spreadsheet.