HMRC raised its advisory petrol rate for cars over 2000cc to 26p per mile, up from 22p, with the change taking effect on 1 June 2026. The department also lifted petrol, diesel and LPG pence‑per‑mile allowances across most engine bands while leaving electric vehicle advisory rates unchanged at 7p per mile for home charging and 15p for public charging. The move will matter most to employers running company car schemes and to staff who receive or repay fuel for private journeys, HMRC said, adding the rises reflect higher wholesale and pump prices since the outbreak of hostilities in the Middle East. "There will be no fuel benefit charge if you correctly record all private travel mileage and use the correct rate (or higher)," HM Revenue and Customs added.

"There will be no fuel benefit charge if you correctly record all private travel mileage and use the correct rate (or higher), to work out how much your employees must repay you for fuel used for private travel," HM Revenue and Customs said.

What the new rates are

From 1 June HMRC set new pence-per-mile Advisory Fuel Rates for petrol at 14p per mile for engines up to 1400cc, up from 12p; 17p per mile for 1401-2000cc, up from 14p; and 26p per mile for engines over 2000cc, up from 22p. Diesel rates rose to 15p per mile for engines up to 1600cc, from 12p; 17p for 1601-2000cc, from 13p; and 23p for engines over 2000cc, from 18p. LPG rates were increased to 11p, 13p and 21p per mile across the small, mid and large engine bands respectively.

Advisory Electric Rates remain unchanged, split by charger type at 7p per mile for home charging and 15p per mile for public charging. Hybrids continue to be treated as petrol or diesel for AFR purposes.

The principal consequence lands on employers operating company car schemes and on employees who either receive fuel for private use or repay their employer for private journeys. HMRC says that if an employer reimburses business mileage at or below the relevant AFR for the car’s fuel type and engine size, there's no taxable fuel benefit and no Class 1A National Insurance liability. If an employer pays rates above the AFR, it must be able to demonstrate higher actual fuel costs for the excess to avoid that excess being treated as taxable pay.

Mastheads

Employees who choose to cover the full cost of private fuel by repaying their employer at a lower mileage rate are permitted to use their own calculations rather than the advisory rates. That gives some flexibility to staff, although the administrative burden of accurate mileage records remains. HMRC emphasised correct recording of private travel mileage as the primary protection against a fuel benefit charge.

Why rates moved now

HMRC calculated the Advisory Fuel Rates using average pump prices and vehicle efficiency data. The increases, the department said, reflect rising wholesale and retail pump prices since the outbreak of hostilities in the Middle East, which pushed UK petrol and diesel to multi-year highs.

RAC data cited alongside the rate change showed petrol averaging around 159p per litre, with diesel also sharply higher in late May.

The AFRs are reviewed quarterly on 1 March, 1 June, 1 September and 1 December, giving HMRC a regular mechanism to respond to volatile fuel markets. Employers and fleet managers therefore have a clear timetable for when allowances may move again.

Separately, HMRC and government publications implemented an increase to the Approved Mileage Allowance Payment for personal vehicles, raising the first 10,000 mile rate to 55p per mile with effect from 6 April 2026. That change affects employees using personal cars for business travel rather than company cars, and it sits alongside the AFR adjustments as part of the wider mileage and fuel framework.

Related Articles

HMRC will review the Advisory Fuel Rates again on 1 September 2026, when the department will reassess the pence‑per‑mile figures against any further pump price movements. Originally reported by express.co.uk.

This article was created with AI assistance.