Fleet AFRs go down but Advisory Electricity Rate rises

By / 2 years ago / UK News / No Comments

HMRC has responded to rising energy prices with a one pence per mile increase to the Advisory Electricity Rate (AER), used for reimbursing electric company car drivers.

The AER goes up to 9ppm from 1 March 2023

Announced alongside a fall in Advisory Fuel Rates (AFRs), the AER rises from 8ppm to 9ppm from 1 March 2023, following ongoing criticism that the reimbursement rate is leaving EV drivers out of pocket.

HMRC had already increased the rate from 5ppm to 8ppm as of 1 December 2022 while committing to quarterly reviews, in line with the practice for AFRs. It’s also revised the way that the AER is calculated to now include data from the Office for National Statistics (ONS) alongside figures from the Department for Business, Energy & Industrial Strategy (BEIS) and car electrical consumption rates from the Department for Transport (DfT).

While the AER has gone up, AFRs for petrol, diesel and LPG-engined vehicles have gone down, reflecting the recent falls in pump prices. And in some cases, the fall is as much as 3ppm.

The new AFRs see petrol rates drop by 1ppm for smaller engined cars, 2ppm for midsize and 3ppm for larger. Diesel AFRs go down by 1ppm for smaller-engined and 2ppm for midsize and larger-engined cars.

For LPG-fuelled vehicles, rates for smaller engine sizes stay the same but midsize and larger-engined vehicles fall by 1ppm.

The new AFR tables are as follows (old rates in brackets):

Engine size Petrol – amount per mile LPG – amount per mile
1400cc or less 13 pence (14p) 10 pence (10p)
1401cc to 2000cc 15 pence (17p) 11 pence (12p)
Over 2000cc 23 pence (26p) 17 pence (18p)
Engine size Diesel – amount per mile
1600cc or less 13 pence (14p)
1601cc to 2000cc 15 pence (17p)
Over 2000cc 20 pence (22p)

The previous rates can be used for up to one month from the date the new rates apply. Hybrid cars are treated as either petrol or diesel cars for AFR purposes.

The full list of rates can be viewed here, along with the tables for calculating them.

For more of the latest industry news, click here.

Natalie Middleton

Natalie has worked as a fleet journalist for over 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. Natalie edits all the Fleet World websites and newsletters, and loves to hear about any latest industry news - or gossip.