HM Revenue and Customs (HMRC) has confirmed the new advisory fuel rates for company car users, effective from 1 September 2026. The rates, which apply to petrol, diesel, liquefied petroleum gas (LPG) and electric vehicles, have been published on the HMRC website following a quarterly review.
The rates are only applicable to employees who drive company cars. They are used when employers either reimburse staff for business travel in company vehicles or require employees to repay the cost of fuel used for private journeys. HMRC has stressed that these rates must not be used in any other circumstances.
Quarterly review and data sources
HMRC reviews the advisory fuel rates four times a year, on 1 March, 1 June, 1 September and 1 December. The latest update was confirmed on Friday, 21 August 2026, with the new rates taking effect from 1 September.
According to HMRC, the petrol and diesel prices are derived from data supplied by the Department for Energy Security and Net Zero (DESNZ), while the LPG UK average comes from the Automobile Association website. The advisory electric rate for fully electric cars is calculated using electricity price data from DESNZ and the Office for National Statistics (ONS), alongside car electrical consumption rates from the Department for Transport (DfT) and annual car sales volumes to businesses, based on a three-year average from Fleet Audits.
The annual equivalent rate is determined by combining the cost of electricity per mile for each model, as provided by the DfT, with electricity price data from DESNZ and the ONS. The public charging advisory electric rate for fully electric cars is calculated using additional public charging price data from the Zapmap Price Index.
New rates from 1 September 2026
The updated advisory fuel rates include several adjustments across different fuel types and engine sizes:
Petrol:
- Engines up to 1,400cc – remains at 14p per mile
- Engines between 1,401cc and 2,000cc – remains at 17p per mile
- Engines over 2,000cc – rises from 26p to 27p per mile
Diesel:
- Engines up to 1,600cc – remains at 15p per mile
- Engines between 1,601cc and 2,000cc – falls from 17p to 16p per mile
- Engines over 2,000cc – falls from 23p to 22p per mile
Electric:
- Home charger – remains at 7p per mile
- Public charger – remains at 15p per mile
Liquefied Petroleum Gas (LPG):
- Engines up to 1,400cc – remains at 11p per mile
- Engines between 1,401cc and 2,000cc – remains at 13p per mile
- Engines over 2,000cc – falls from 21p to 20p per mile
The changes mean that drivers of larger petrol company cars will see a 1p increase in the advisory rate, while those with larger diesel engines will benefit from a 1p reduction. LPG rates for larger vehicles also fall by 1p, while all other categories remain unchanged.
Impact on businesses and employees
For businesses that reimburse employees for business travel in company cars, the updated rates will affect the amount paid per mile. Employers who collect payments from employees for private fuel use will also need to adjust their calculations accordingly.
The advisory fuel rates are designed to reflect current fuel prices, helping to ensure that reimbursements and repayments are fair and accurate. HMRC's quarterly review process means that rates can change frequently, so employers and employees should check the latest figures before making any payments.
The new rates come into force on 1 September 2026 and will remain valid until the next quarterly review on 1 December 2026.
