HMRC Advisory Fuel Rates: reclaiming VAT on fuel
The quarterly rates that let UK employers reclaim VAT on the fuel portion of business trips.
What AFRs are and why they matter
HMRC's Advisory Fuel Rates (AFRs) are the per-mile fuel-cost figures published quarterly (1 March, 1 June, 1 September, 1 December).[^hmrc-afr-81] They serve two distinct purposes:
1. **Reimbursement of company-car drivers** for business fuel, free of Income Tax and Class 1A NIC. 2. **VAT recovery on the fuel element** of any AMAP paid to a personal-car driver, if the employer is VAT-registered.
Without the second use, the £4,500 AMAP a high-mileage employee receives is fully out-of-scope for VAT and the company recovers nothing on the fuel.
Sample AFRs (Q1 2026, illustrative)
| Engine | Petrol | Diesel | LPG | |---|---|---|---| | Up to 1,400cc | 14p | — | 11p | | 1,401–2,000cc | 16p | 14p | 13p | | Over 2,000cc | 25p | 20p | 19p |
*Always check HMRC's current-quarter table before applying — the rates move with fuel prices.*
Electric: a separate Advisory Electric Rate (AER) is published, currently around 8p/mile.
How VAT recovery works
Example: an employee drives 1,000 business miles in a 1.6L diesel car. Employer pays AMAP at 45p/mile = £450.
- Fuel element at AFR: 1,000 × 14p = £140. - VAT on fuel element (£140 × 1/6 since VAT is 20% inclusive): £23.33.
The employer recovers £23.33 of input VAT, provided they hold a VAT receipt for at least that much fuel for the period. The receipt doesn't have to match each trip, but the cumulative fuel receipts must cover the cumulative VAT reclaimed.
What to keep on file
- Mileage logs: date, origin, destination, miles, purpose, vehicle. - VAT fuel receipts: dated, with the supplier's VAT number, sufficient cumulative value to cover the VAT reclaimed. - AMAP register per employee per tax year. - AFR table version applied each quarter.
Quilometragem exports a CSV per period that aligns mileage with AMAP and AFR fuel-element calculations, ready for the bookkeeper.
Common errors
- Reclaiming VAT without holding fuel receipts. HMRC will disallow on inspection. - Using stale AFRs (a quarter behind). Apply the rate published for the date of the journey. - Mixing company-car drivers and own-car drivers in the same VAT column. - Forgetting the AER for electric vehicles.
Self-billed alternative: "actual" method
Instead of AFRs, an employer can reclaim VAT on actual fuel receipts charged to a fuel card or company account, applying the business-use proportion. This is more accurate but more admin. AFR is the simpler choice for the typical SME.
Bottom line
If your company reimburses staff via AMAP and is VAT-registered, applying AFRs to the fuel element recovers thousands per year that would otherwise be lost. The setup is one-off, the maintenance is per-quarter, and the payback is immediate.