HM Revenue and Customs (HMRC) is preparing to introduce updated advisory fuel rates (AFRs) for company car users across the United Kingdom, with new figures scheduled for release in the coming weeks. These quarterly adjustments impact petrol, diesel, electric, and liquefied petroleum gas (LPG) vehicles, setting the benchmark for reimbursing employees for business mileage or calculating repayments for private fuel use.
Quarterly Updates and Key Dates
HMRC publishes revised advisory fuel rates every three months, providing a consistent framework for employers and employees. The upcoming rates will be unveiled on Sunday, March 1, with subsequent updates planned for June 1, September 1, and December 1. This regular schedule ensures that the rates reflect current fuel costs and market conditions, helping businesses manage expenses efficiently.
Tax and National Insurance Implications
If employers reimburse mileage at or below the advisory fuel rates for the specific engine size and fuel type of the company car, no taxable profit arises, and there is no Class 1A National Insurance liability. This simplifies payroll processes and reduces administrative burdens for companies adhering to the guidelines.
However, if payments exceed the advisory rates without evidence of higher actual fuel costs per mile, the excess is treated as taxable profit and earnings for Class 1 National Insurance purposes. Employers can use their own rates if their vehicles are more fuel-efficient or if business travel costs are higher, but they must justify these deviations to avoid potential tax charges.
Current Advisory Fuel Rates Overview
The rates from December 1, 2025, remain largely unchanged, with one notable adjustment for electric vehicles. Below is a summary of the current per-mile rates:
Petrol Engines
- Engines up to 1,400cc: 12p
- Between 1,401cc and 2,000cc: 14p
- Over 2,000cc: 22p
Diesel Engines
- Engines up to 1,600cc: 12p
- Between 1,601cc and 2,000cc: 13p
- Over 2,000cc: 18p
Electric Vehicles
- Home charger: Reduced from 8p to 7p
- Public charger: 14p
Liquefied Petroleum Gas (LPG)
- Engines up to 1,400cc: 11p
- Between 1,401cc and 2,000cc: 13p
- Over 2,000cc: 21p
These rates are crucial for businesses to ensure compliance with tax regulations while fairly compensating employees for travel expenses. Employers are advised to review the new rates upon publication to adjust their reimbursement policies accordingly.
