HMRC Raises Advisory Fuel Rates From 1 June 2026: New Petrol, Diesel and LPG Mileage Rates for Company Cars

HM Revenue and Customs published its quarterly Advisory Fuel Rates for the period from 1 June 2026 to 31 August 2026. The figures set the maximum reimbursement an employer can pay a company car driver for business mileage, and the minimum repayment an employee must make when a company car is also used privately, without triggering an income tax or National Insurance charge.

The rates are reviewed every three months. They reflect the fuel prices, miles per gallon and electricity costs HMRC uses in the underlying calculation, weighted across the company car fleet by business sales over the most recent three years.

The June 2026 review pushed petrol, diesel and LPG rates upward in line with higher pump prices over the spring quarter. Electric vehicle rates held at the level set in March 2026. The largest single increase is the over 2000cc diesel band, which moved up by 5p per mile.

The new rates from 1 June 2026

The figures below apply only to fully electric or internal combustion company cars. Hybrid cars are treated as either petrol or diesel based on the engine type, with no standalone hybrid rate.

How the rates changed from the March quarter

The figures below compare the March 2026 quarter rates with the June 2026 rates band by band. Petrol moved up by between 2p and 4p per mile depending on engine size. Diesel moved up by between 3p and 5p per mile. LPG moved up by 1p or 2p per mile. The electric vehicle rate for both home and public charging is unchanged.

For a driver covering 800 business miles a quarter in a diesel company car over 2000cc, the 5p uplift is worth £40 of additional tax-free reimbursement compared with the March 2026 rate. For an over 2000cc petrol driver doing the same mileage, the 4p uplift is worth £32.

What HMRC used to calculate the June 2026 rates

HMRC publishes the underlying calculation inputs alongside the headline figures. The tables below show the mean miles per gallon, fuel price per litre and per gallon, and the unrounded versus rounded rate per mile for each band.

The mean MPG for each band is drawn from manufacturer information weighted by business sales across the most recent three years of fleet audits. The petrol and diesel price per litre figures come from the Department for Energy Security and Net Zero, which publishes weekly road fuel prices. The LPG price is taken from the Automobile Association. The home charging electricity rate uses the DESNZ pence per kilowatt hour figure adjusted by the Office for National Statistics consumer prices index for electricity. The public charging rate uses the Zapmap Price Index for slow and fast chargers below 50 kilowatts.

The grace period and what employers should do

Employers running company car schemes do not have to switch payroll systems on the first day of a new quarter. HMRC permits up to one month of continued reimbursement at the previous rates after a new rate takes effect. For the June 2026 update, the March quarter figures can therefore still be used until 30 June 2026 at the latest. From 1 July 2026, all mileage reimbursement should be aligned to the June 2026 figures.

Mileage logs covering business travel from 1 June onward should be reconciled against the new figures whenever the employer switches over. Where the switch happens part way through the month, two rates may apply within a single payroll period: the March rate for business mileage before the switch date, and the June rate after. Payroll systems with mileage modules will normally apply this split automatically once the date and rates are updated.

Continuing to reimburse at the March 2026 rate beyond 30 June 2026 does not automatically create a tax charge, but the reimbursement will fall below the new AFR. Employees who are consistently underpaid relative to the AFR can claim the shortfall as Mileage Allowance Relief through a Self Assessment tax return or via form P87.

Advisory Fuel Rates compared with Approved Mileage Allowance Payments

The two reimbursement schemes are often confused but they apply to different situations.

Advisory Fuel Rates apply when an employee drives a company car. The reimbursement covers fuel only, on the basis that the employer already pays for the vehicle. Rates are reviewed quarterly by HMRC and reflect the fuel cost component of running the vehicle.

Approved Mileage Allowance Payments, known as AMAP, apply when an employee drives their own car for business. The reimbursement covers fuel, insurance, maintenance, depreciation and other running costs. Rates are set by Parliament rather than HMRC and are reviewed at fiscal events rather than quarterly.

The AMAP rate for cars and vans rose from 45p to 55p per mile for the first 10,000 business miles in a tax year. The change was announced by Chancellor Rachel Reeves in the House of Commons on 21 May 2026 and was backdated to 6 April 2026. The rate for mileage above 10,000 miles in the same tax year remains at 25p per mile. Motorcycle and bicycle rates are unchanged at 24p and 20p per mile respectively. The 55p figure is the first uplift to the AMAP cars and vans rate since the 2011 to 2012 tax year, when the rate moved from 40p to 45p.

The AMAP increase does not affect Advisory Fuel Rates. The two schemes run in parallel.

Worked examples

Electric vehicle position

The Advisory Electricity Rate for fully electric company cars is set in two parts: a home charging rate of 7p per mile and a public charging rate of 15p per mile. Both figures are unchanged from the March 2026 review.

For journeys where a car is charged at both public and private locations, HMRC allows mileage to be apportioned between the two rates as long as the calculation is fair and reasonable. Employers can also pay a higher rate than 15p per mile for public charging where they can demonstrate that the actual cost per mile is higher, for example using rapid chargers above 50 kilowatts where the Zapmap data does not apply.

The public charging rate covers slow and fast chargers below 50 kilowatts. Rapid chargers at 50 kilowatts and above typically cost more per kilowatt hour than the 54.00p input used in the June 2026 calculation. Where rapid charging is the norm and the employer has evidence of cost, the published 15p rate can be exceeded without tax consequences provided the actual cost per mile is documented.

Hybrid cars are treated as either petrol or diesel for Advisory Fuel Rate purposes based on the engine type. There is no separate hybrid rate, and the AFR applied is the petrol or diesel rate for the engine size of the combustion unit.

Tax and National Insurance treatment

Reimbursement at the Advisory Fuel Rate or below creates no taxable profit for the employee and no Class 1A National Insurance liability for the employer. The AFR scheme exists to provide a safe harbour figure that employers can use without P11D reporting or further tax consequences.

Reimbursement above the AFR is permitted, but the employer must be able to show that the actual fuel cost per mile is higher. Where the higher cost cannot be evidenced, the excess over the AFR is treated as earnings for income tax and Class 1 National Insurance.

For private mileage repayments, the employee must repay at least the AFR for each mile. A repayment below the AFR creates a fuel benefit charge under the company car fuel benefit rules in Chapter 6 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003. The fuel benefit charge is a flat annual figure based on a multiplier set at fiscal events and the car's CO2 emissions, not on actual mileage, so it is typically a much larger tax exposure than the underlying fuel cost the employee would otherwise have repaid.

How HMRC calculates Advisory Fuel Rates

HMRC publishes both the headline rates and the inputs used in the calculation. The methodology has four steps.

First, the mean miles per gallon is taken from manufacturer information, weighted by business sales across the most recent three years of fleet audits. The MPG used for LPG is 20 percent lower than for petrol, reflecting LPG's lower volumetric energy density.

Second, the fuel price per litre is taken from official statistics. Petrol and diesel prices come from the Department for Energy Security and Net Zero weekly road fuel price publication. The LPG price is taken from the Automobile Association.

Third, the calculation produces an unrounded rate per mile in pence to one decimal place. For the June 2026 review, the unrounded figures range from 11.1p for the smallest LPG band up to 26.2p for the largest petrol band.

Fourth, the unrounded figure is rounded to the nearest whole penny. A figure ending in 0.5 is rounded down where the underlying unrounded number ends below 0.5 (for example 0.487 rounds to 0p), and rounded up where it ends above 0.5 (for example 0.513 rounds to 1p).

The electric vehicle home charging rate uses the DESNZ pence per kilowatt hour figure adjusted by the ONS consumer prices index for electricity, combined with weighted average miles per kilowatt hour data from the Department for Transport. The public charging rate uses the Zapmap Price Index for slow and fast chargers below 50 kilowatts. Annual car sales volumes to businesses over the last three years provide the weighting for the electrical efficiency input.

Rate trajectory: the last eight quarters

The table below shows the Advisory Fuel Rates for each quarter from June 2024 through to June 2026. Until 1 September 2025, HMRC published a single Advisory Electricity Rate covering all charging. From 1 September 2025, the rate was split into separate home and public charging figures.

The June 2026 figures restore petrol and diesel rates to their highest levels since the June 2024 quarter, which was the previous peak following the 2022 to 2023 wholesale fuel price spike. The public charging rate for electric vehicles was introduced from 1 September 2025 at 14p per mile and lifted to 15p per mile from 1 March 2026, where it has held for the June 2026 quarter.

Next review

HMRC publishes Advisory Fuel Rates on a fixed quarterly cycle: 1 March, 1 June, 1 September and 1 December each year. The next review will take effect from 1 September 2026. HMRC normally publishes the new figures in the last week of the preceding month, so the September 2026 rates will likely appear on gov.uk around 21 to 22 August 2026.

FAQs

Who do Advisory Fuel Rates apply to?

Advisory Fuel Rates apply only to employees driving a company car who are reimbursed by their employer for business mileage, or who repay their employer for fuel used during private mileage. Employees driving their own car for business use the Approved Mileage Allowance Payment scheme instead, currently 55p per mile for the first 10,000 business miles in a tax year and 25p per mile thereafter.

When exactly do the June 2026 rates take effect?

The new rates apply to business mileage from 1 June 2026 onward. HMRC permits employers to continue using the March 2026 rates for up to one month after the change, so 30 June 2026 is the latest point at which the old rates can be applied without creating an underpayment relative to the published AFR.

How does the AFR change differ from the AMAP rise to 55p?

Advisory Fuel Rates apply to company cars and cover fuel only. They are reviewed quarterly by HMRC. Approved Mileage Allowance Payments apply to use of an employee's own car for business and cover all running costs, including fuel, insurance, maintenance and depreciation. The AMAP rate is set by Parliament. It rose from 45p to 55p per mile for the first 10,000 business miles in a tax year, backdated to 6 April 2026 and announced on 21 May 2026. The two schemes are independent of each other.

Why has not the electric vehicle rate changed?

The Advisory Electricity Rate uses domestic and public electricity price data from DESNZ, the Office for National Statistics and the Zapmap Price Index. Those underlying prices were stable enough between the March and June reviews that the unrounded rate per mile remained within the same rounding band. The home charging rate stayed at 7p and the public charging rate stayed at 15p. The published gov.uk inputs show 26.90p per kilowatt hour at home and 54.00p per kilowatt hour at public chargers, combined with an electrical efficiency of 3.59 miles per kilowatt hour.

What if my company car journey covers both home and public charging?

HMRC allows the mileage to be apportioned between the two rates as long as the apportionment is fair and reasonable. For example, a 500 mile journey with 60 percent home charging and 40 percent public charging would be reimbursed as (300 multiplied by 7p) plus (200 multiplied by 15p) equals £51. The basis for the apportionment should be documented, for example using charging session records from the employer's fleet management software.

Can my employer pay more than the AFR?

Yes, but the employer must be able to show that the actual fuel cost per mile is higher than the Advisory Fuel Rate. Where higher cost cannot be evidenced, the excess over the AFR is taxable as earnings and subject to Class 1 National Insurance contributions on the excess. For electric vehicles using rapid chargers above 50 kilowatts, the cost per kilowatt hour is typically higher than the 54.00p input used in the public charging AER, and a higher rate may be supportable with charging session evidence.

How are hybrid cars treated?

Hybrid cars, including plug-in hybrids, are treated as either petrol or diesel for Advisory Fuel Rate purposes, based on the engine type of the combustion unit. There is no standalone hybrid AFR. The rate applied is the petrol or diesel AFR for the engine size of the combustion engine. This contrasts with the Approved Mileage Allowance Payment scheme, where the same 55p and 25p rates apply regardless of fuel type.

What happens if my employer keeps reimbursing at the old March rate?

For up to one month after a rate change, the old rate can still be used without tax consequences. Beyond that point, reimbursement at the old rate becomes an underpayment relative to the new AFR. The employer can choose to top up the difference or leave it. Where the employee is consistently underpaid relative to the AFR, the shortfall can be claimed through Mileage Allowance Relief on a Self Assessment tax return or via form P87 to HMRC.

What is the fuel benefit charge mentioned in the tax treatment section?

The fuel benefit charge is a separate tax charge that applies where an employer provides fuel for private use in a company car. It is calculated under Chapter 6 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003 as a fixed annual multiplier set by Parliament, multiplied by the car's appropriate percentage based on CO2 emissions. The charge applies regardless of actual private mileage, so it can be a significantly larger tax exposure than the underlying fuel cost. The standard route to avoid the charge is for the employee to repay the cost of fuel used for private mileage at or above the Advisory Fuel Rate.

Where is the official source?

The current Advisory Fuel Rates and the full history of previous rates are published at gov.uk/guidance/advisory-fuel-rates. The page is maintained by HMRC and updated within the last full week of the month before each quarterly change. The June 2026 figures were published on 22 May 2026.

When will the next AFR review be published?

The next review will take effect from 1 September 2026. HMRC normally publishes the new rates in the last week of August, with the formal effective date being the first day of the new quarter. The cycle then continues with rates effective from 1 December 2026 (published late November), 1 March 2027 (published late February) and 1 June 2027 (published late May).