Drivers in the UK may see higher travel costs as new Advisory Fuel Rates (AFR) take effect from March 1, following HMRC’s quarterly review of company car rates.
For diesel vehicles, the rate for cars with engines up to 1,600cc has increased from 11 to 12 pence per mile (ppm), while those between 1,601-2,000cc remain at 13ppm.
Diesel cars with engines over 2,000cc will continue at 17ppm. These rates are based on a diesel price of 146.1 pence per litre, according to HMRC. Petrol car users will also face changes, with rates for vehicles between 1,401-2,000cc increasing from 14ppm to 15ppm.
However, other categories remain unchanged—cars up to 1,400cc stay at 12ppm, while those over 2,000cc continue at 23ppm. These figures are calculated using a petrol price of 138.7 pence per litre, with fuel efficiency levels varying across engine sizes.
Meanwhile, electric car users will continue to benefit from a lower advisory electricity rate, which remains at 7ppm.
HMRC has stated that this rate is calculated based on an electrical efficiency of 3.57 miles per kilowatt hour, factoring in domestic electricity costs of 25.24 pence per kilowatt hour. This allows electric vehicle users to claim back fuel costs from their employers at a lower rate compared to petrol and diesel car owners.
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