Jobaaj Stories
HMRC Fuel Rates: Petrol, Diesel & Electric Vehicle Updates for March 2025
Driving a company car? The UK's HM Revenue & Customs (HMRC) has announced slight increases to its Advisory Fuel Rates (AFRs) for company cars, effective March 1st, 2025. This article breaks down the changes and their impact on your travel expenses.
What are HMRC Advisory Fuel Rates (AFRs)?
HMRC's AFRs are guidelines for businesses to reimburse employees using company vehicles for work. These rates, updated quarterly, reflect fluctuating fuel prices. Reimbursement amounts depend on factors like engine size and fuel type, ensuring fair compensation and preventing unnecessary tax liabilities from excessive payments.
AFR Changes Starting March 1, 2025
The March 2025 update introduces small increases for specific vehicles:
- Petrol Vehicles (1401cc - 2000cc): A 1p per mile increase. This affects mid-sized petrol cars.
- Diesel Vehicles (Up to 1600cc): A 1p per mile increase. Smaller diesel engines will see a modest rise.
- Electric Vehicles: The rate remains unchanged at 7p per mile.
Why the Increase?
These increases directly reflect recent petrol and diesel price fluctuations. HMRC regularly reviews AFRs to keep them aligned with actual fuel costs, preventing both underpayment and overpayment of fuel reimbursements for employees.
Impact on Employers and Employees
Employers must use the new rates from March 1st, 2025, adjusting reimbursement policies accordingly. Employees using company cars for business travel will see a small increase in their fuel reimbursements, helping offset rising fuel costs.
Conclusion
The modest AFR increases primarily affect petrol and diesel vehicles within specific engine size ranges. Staying informed about these changes is crucial for both employers and employees to ensure fair reimbursements and compliance with HMRC guidelines. For the latest rates and details, always check the official HMRC website.
