Last reviewed: 1 June 2026
HM Revenue and Customs published new quarterly Advisory Fuel Rates applying from 1 June 2026. The rates set the maximum tax and National Insurance free amount an employer can reimburse for business mileage in a company car, or charge an employee for private mileage. Increases applied across petrol, diesel and LPG bands following the rise in wholesale fuel prices linked to the Iran conflict. Electric vehicle rates are unchanged this quarter.
- Effective date: 1 June 2026 (next review 1 September 2026)
- Petrol up to 1400cc: 14p per mile (from 13p)
- Petrol 1401cc to 2000cc: 17p per mile (from 16p)
- Petrol over 2000cc: 26p per mile (from 25p)
- Diesel up to 1600cc: 15p; 1601cc to 2000cc: 17p; over 2000cc: 23p per mile
- Average pump price in spring 2026: around 159p per litre petrol, 184p per litre diesel
What changed on 1 June
Petrol Advisory Fuel Rates rose by 1p per mile across all three engine bands. Diesel rates rose by between 1p and 2p per mile depending on engine size. LPG rates rose by 1p per mile in the smaller bands and 2p in the largest band. Electric vehicle reimbursement was held at the existing rates, with the split between home charging and public charging retained.
Why the rates moved up
HMRC calculates Advisory Fuel Rates each quarter using accredited official statistics from the Department for Energy Security and Net Zero on average pump prices. Petrol pump prices rose by around 16.6 percent between March and April 2026, reaching their highest level since November 2022, and have remained elevated through May. Diesel followed the same pattern. The June rates reflect that fresh data.
What employers need to do
Employers operating company-car schemes have a one-month grace period during which the previous March rates can still be applied. Mileage records covering business travel after 1 June should be reconciled against the new rates from 1 July at the latest. Reimbursement at exactly the published Advisory Fuel Rate creates no tax or National Insurance charge on the employee. Reimbursement above the rate is taxable as earnings on the excess.
How the rate fits with the new 55p AMAP
Advisory Fuel Rates apply only to company cars. Where an employee uses a personal vehicle for business travel, the Approved Mileage Allowance Payment regime applies instead. Chancellor Rachel Reeves confirmed in the House of Commons on 21 May 2026 that the AMAP rate is rising from 45p to 55p per mile for the first 10,000 business miles, backdated to April 2026. That figure is set by Parliament rather than HMRC and is reviewed at fiscal events rather than quarterly.
The electric vehicle position
The Advisory Electricity Rate for company-car drivers charging at home stays at the level set in the March 2026 review, as does the higher public-charging figure. HMRC continues to treat hybrid vehicles as either petrol or diesel for AFR purposes based on the engine type rather than offering a standalone hybrid rate.
FAQs
What is an Advisory Fuel Rate?
It is the maximum amount HMRC will accept as fuel-only reimbursement for business mileage in a company car without creating a tax charge. The rates are updated quarterly.
Do the new rates apply from 1 June or 1 July?
The new rates apply from 1 June, but employers can use the previous rates for up to one month after a change. Most payroll systems switch on 1 June for clarity.
How does this differ from the 45p or 55p mileage rate?
The 55p per mile rate (formerly 45p) is the Approved Mileage Allowance Payment for use of a personal car on business. Advisory Fuel Rates apply only to company cars and cover fuel only, not running costs.
Why has electric not changed?
The Advisory Electricity Rate is reviewed using DESNZ data on domestic and public electricity prices. Those prices have been steadier than petrol and diesel, so the EV rate held this quarter.
