HMRC’s Advisory Fuel Rates (AFRs) are used when employees travel for business in company cars or need to repay the cost of fuel used for private journeys. The rates are reviewed regularly and can change several times during the year as fuel costs move.
The latest rates took effect from 1 September 2026, replacing the figures introduced in June. They cover petrol, diesel, LPG and electric company cars, with different rates applying according to fuel type and, for combustion-engine vehicles, engine size.
It’s important to understand who these rates apply to. AFRs are primarily for company cars — they are not the standard mileage rates used when an employee drives their own privately owned car for business.
That distinction can cause confusion, particularly when HMRC changes its rates. In this guide, we’ll explain the current Advisory Fuel Rates, when they can be used and what company car drivers need to know.
For more practical advice on running and looking after your vehicle, visit our Car Maintenance Guidance hub.
What Are HMRC Advisory Fuel Rates?
Advisory Fuel Rates are HMRC’s guideline mileage rates for employees using company cars. They can be used when an employer reimburses an employee for fuel used during business travel, or when an employee needs to repay the cost of fuel used for private journeys in a company car.
HMRC makes clear that these rates apply specifically to employees using company cars and should not be used as general mileage rates in other circumstances.
The current rates, applying from 1 September 2026, are:
Petrol cars
- 1,400cc or less: 14p per mile
- 1,401cc to 2,000cc: 17p per mile
- Over 2,000cc: 27p per mile
Diesel cars
- 1,600cc or less: 15p per mile
- 1,601cc to 2,000cc: 16p per mile
- Over 2,000cc: 22p per mile
LPG cars
- 1,400cc or less: 11p per mile
- 1,401cc to 2,000cc: 13p per mile
- Over 2,000cc: 20p per mile
Fully electric cars
- Home charging: 7p per mile
- Public charging: 15p per mile
Hybrid cars are treated as either petrol or diesel cars for Advisory Fuel Rate purposes.
HMRC also allows the previous rates to be used for up to one month after new rates take effect. If actual fuel costs per mile are demonstrably higher than the advisory figure, a higher rate can be used where the cost can be evidenced.
Why Advisory Fuel Rates Matter for Company Car Drivers
Advisory Fuel Rates matter because they provide employers and employees with HMRC-approved figures for calculating certain company-car fuel payments without creating an additional tax liability.
When an employer reimburses an employee for business fuel at no more than the appropriate Advisory Fuel Rate, HMRC says there is no taxable profit and no Class 1A National Insurance to pay.
Employers are not required to use the advisory rates in every situation. A different rate can be used where it can be demonstrated that the actual fuel cost per mile is higher or lower, although records should be kept to support the calculation.
The rates can also be used when an employee repays their employer for fuel used during private journeys in a company car. Using the appropriate rate can help demonstrate that the cost of private fuel has been repaid.
Because HMRC reviews the figures regularly, company car drivers and employers should check the current rates rather than relying on figures from an earlier quarter.
It’s also important not to confuse Advisory Fuel Rates with Approved Mileage Allowance Payments (AMAPs). AMAPs concern employees using their own vehicles for business journeys, whereas AFRs relate to fuel costs for company cars.
What Should Company Car Drivers Do?
Company car drivers don’t need to do anything complicated when HMRC changes its Advisory Fuel Rates, but there are a few practical points worth remembering.
1. Check the latest rate
Make sure you’re using the correct rate for your vehicle’s fuel type and engine size. For fully electric company cars, check whether the journey is being reimbursed using the home-charging or public-charging rate.
2. Keep accurate business mileage records
Maintain a clear record of business journeys, including the mileage travelled. Good records can help support reimbursement claims and distinguish business travel from private mileage.
3. Check your employer’s reimbursement policy
Employers may use HMRC’s Advisory Fuel Rates, but different arrangements can apply where actual fuel costs can be demonstrated. If you’re unsure which rate your employer uses, check your company’s mileage or expenses policy.
4. Don’t confuse a company car with your own car
If you use your personally owned vehicle for business journeys, Advisory Fuel Rates aren’t the relevant mileage rates. Different HMRC rules apply to Approved Mileage Allowance Payments for employees using their own vehicles.
5. Check again when the rates change
HMRC reviews Advisory Fuel Rates regularly, so figures can change during the year. If you frequently claim company-car business mileage, check the current rates rather than relying on an older reimbursement figure.
Understanding the Different HMRC Mileage Rates
HMRC’s Advisory Fuel Rates are relatively straightforward once the distinction between company cars and privately owned vehicles is understood.
For company car drivers, the rates provide a standard way of calculating fuel costs for business journeys and repaying private fuel. Because HMRC reviews the figures regularly, however, it’s important to use the current rates rather than relying on figures from an older claim or expense policy.
Drivers using their own cars for work fall under a different mileage system, so the type of vehicle ownership matters when deciding which HMRC rates are relevant.
Fuel costs are only one part of the overall expense of running a vehicle. If you’re interested in reducing those costs, our guide to how to improve your car’s fuel economy explains some practical ways to use less fuel.
And if you’re considering whether petrol, diesel or another powertrain makes most sense for your next vehicle, read our guide to petrol vs diesel cars for some of the factors worth considering.
Thinking About Selling Your Car?
Fuel costs, mileage and the type of engine your car uses can all play a part in its running costs and appeal on the used-car market.
If you’re thinking about selling and want to know what your vehicle could be worth, use jamjar’s free online car valuation tool to get started.