New Hmrc Advisory Fuel Rates: How Will It Affect Your Fleet?

Courier driversand fleet managers alike know how important it is to keep an eye on fuel costs. And this isn’t just true when it comes to buying it at the pump. Employees must expense the company for anything spent on business-related travel, while employers need to know the details to spend the right amount on tax and national insurance.

In this article, we’ll outline some of the facts around government rates, what they’re for and why they change. Read on for all this, and to learn how things currently stand for the quarter beginning June 2019.  

What are HMRC rates?

Also known as Advisory Fuel Rates (AFRs), HMRC rates are government outlines of how much fuel is expected to cost. To set them, HMRC considers factors like current costs, taxes and applied miles per gallon (mpg), as well as seasonal changes and road conditions.

But how do these things affect courier drivers?

What They’re Used For

Rates are a standard and simple way for employers to reimburse employees for money spent while travelling/working in a company car. It is important to note that this applies only to business travel. While AFRs are not used for personal trips, businesses and workers can come to their own arrangements concerning fuel benefits in that area. 

Workers’ personal cars are also not considered when calculating how much a business owes – even in the transport industry. So if any of your courier driversuse their own vehicles, the rates won’t apply.

New Rates

AFRs are adjusted quarterly. This allows the government to take account of seasonal and weather changes as well as to adapt to fast-moving shifts in costs and technology. The changes are announced just before the start of each new quarter, and it’s important to stay on top of them to ensure neither you nor your courier driversare paying too much.

For the quarter starting June 2019, AFRs for all classes but one increased by just £0.01 per mile. Diesel vehicles with engines below 1600cc saw no increase at all.

Current AFRs

All costs are given per mile.

Petrol

• Less than 1400cc:       £0.12
• 1401-2000cc:              £0.15
• More than 2000cc:      £0.22

Diesel 

• Less than 1600cc:       £0.10
• 1601-2000cc:              £0.12
• More than 2000cc:      £0.14

LPG

• Less than 1400cc:       £0.08
• 1401-2000cc:              £0.09
• More than 2000cc:      £0.14

As you can see, LPG is cheapest and petrol most expensive, while diesel tends to sit in the middle. Unsurprisingly, bigger engines cost more, although firms should note the higher threshold for diesel vehicles. While petrol and LPG both move into the second band at 1401cc, diesel stays in the lower band until 1601cc.

Moreover, courier driversusing electric vehicles should note that the advisory electric rate (AER) has remained unchanged, at £0.04 per mile.

While some changes can be predicted, and alterations are often uniform and small, it’s important to check AFRs (and the AER) regularly. Businesses should take care to understand the details of AFRs, as it affects their tax and national insurance commitments as well as what employeespay.

Author Plate

Norman Dulwich is a correspondent for Courier Exchange, the world's largest neutral trading hub for same day work for courier drivers in the express freight exchange industry. Numerous transport exchange businesses are networked together on their website, trading jobs and capacity through what is now the fastest growing Freight Exchange in the UK.