HMRC has published its latest Advisory Fuel Rates (AFRs), which came into effect on 1 September. These rates are used to calculate mileage reimbursement for employees who use company cars for business travel.
The latest update reflects recent changes in fuel prices, with petrol costs reaching their highest level since 2022.
According to the AA, the average price of petrol recently reached 161.6 pence per litre (ppl), while diesel averaged 183.4ppl. HMRC has based its updated reimbursement calculations on fuel prices of 159.9ppl for petrol and 179.2ppl for diesel.
What’s Changed?
There are a small number of adjustments to petrol, diesel and LPG reimbursement rates, while electric vehicle rates remain unchanged.
Petrol Company Cars
| Engine Size | Rate |
|---|---|
| Up to 1,400cc | 14p per mile |
| 1,401cc to 2,000cc | 17p per mile |
| Over 2,000cc | 27p per mile |
The only change for petrol vehicles is for engines over 2,000cc, where the rate has increased from 26p to 27p per mile.
Diesel Company Cars
| Engine Size | Rate |
|---|---|
| Up to 1,600cc | 15p per mile |
| 1,601cc to 2,000cc | 16p per mile |
| Over 2,000cc | 22p per mile |
Rates for larger diesel vehicles have fallen slightly:
- 1,601cc to 2,000cc reduced from 17p to 16p per mile
- Over 2,000cc reduced from 23p to 22p per mile
The rate for diesel vehicles up to 1,600cc remains unchanged.
LPG Vehicles (Liquified petroleum gas)
| Engine Size | Rate |
|---|---|
| Up to 1,400cc | 11p per mile |
| 1,401cc to 2,000cc | 13p per mile |
| Over 2,000cc | 20p per mile |
For LPG-powered vehicles, only the largest engine category has changed, decreasing from 21p to 20p per mile.
Electric Vehicle Reimbursement Rates
HMRC introduced separate Advisory Electric Rates (AERs) for home and public charging in September 2025, recognising the difference in charging costs between the two locations.
For the latest quarter, both rates remain unchanged:
| Charging Location | Rate |
|---|---|
| Home Charging | 7p per mile |
| Public Charging | 15p per mile |
The home charging rate of 7p per mile is based on:
- An electricity cost of 24.47p per kilowatt-hour (kWh)
- An average vehicle efficiency of 3.59 miles per kWh
The public charging rate uses the same efficiency figure but assumes an electricity cost of 54p per kWh.
This public charging cost is calculated using data from the Zapmap Public Charging Price Index for slow and fast chargers (under 50kW), combined with the latest electricity price estimates from the Office for National Statistics (ONS).
HMRC acknowledges that some drivers may use ultra-rapid charging points, which can be significantly more expensive than the rates used in its calculations.
If a company car driver can demonstrate that their actual electricity costs are higher than the advisory rate, a higher reimbursement amount can still be claimed.
For AFR purposes, hybrid vehicles are not treated separately. Instead, they are categorised as either petrol or diesel vehicles and use the corresponding reimbursement rate.
What This Means for Businesses
While the latest AFR update introduces only minor changes, it is important for employers and fleet operators to ensure mileage reimbursement systems are updated accordingly. Businesses reimbursing employees based on HMRC’s advisory rates should review their policies to ensure they remain compliant from 1 September onwards.
For organisations operating mixed fleets that include petrol, diesel, hybrid and electric vehicles, keeping up to date with HMRC’s quarterly rate reviews can help ensure drivers are reimbursed fairly while maintaining tax efficiency.