HMRC has confirmed a 26p per mile charge for petrol drivers from June 1. The tax department released its new advisory fuel rates on Friday, May 22, with drivers of petrol engines exceeding 2000cc facing the highest rate.
New Fuel Rates Breakdown
Under the updated rates, vehicles with engines of 1400cc or less will be charged 14p per mile, while those between 1400cc and 2000cc will pay 17p per mile. The rates take effect from June 1.
According to the government website, HMRC calculates advisory fuel rates based on the mean miles per gallon (MPG) from manufacturers' data, considering annual sales to businesses and Fleet Audits over the last three years.
Rounding Methodology
The 'rates per mile' are initially calculated to one decimal place, then rounded to the nearest whole penny. If the underlying unrounded figure ends in a number less than 0.5 (e.g., 0.487), the rate is rounded down. If it ends in a number greater than 0.5 (e.g., 0.513), it is rounded up.
Petrol and diesel prices are sourced from the Department for Energy Security and Net Zero (DESNZ), while LPG (UK average) data comes from the Automobile Association website.
Mileage Allowance Update
Under current rules, employers can reimburse employees for business travel using an Approved Mileage Allowance Payment, which is tax and National Insurance-free. This allowance has been frozen at 45p per mile for the first 10,000 miles driven each tax year since 2011.
However, on Thursday, during a House of Commons statement, Labour's Rachel Reeves confirmed an increase of 10p, bringing the rate to 55p per mile, backdated to April 2026.
