New Advisory Fuel Rates from 1 September 2026

HM Revenue & Customs (HMRC) has announced updated Advisory Fuel Rates (AFRs) for company cars, with the new rates coming into effect from 1 September 2026.

The rates are used by employers when reimbursing employees for business mileage in company cars, or when employees need to repay the cost of fuel used for private journeys in a company car.

With several of the rates changing from September, employers should make sure their payroll and expenses processes are updated accordingly.

What are Advisory Fuel Rates?

Advisory Fuel Rates are mileage rates published by HMRC for employees who use a company car.

They provide a straightforward way for employers to calculate the amount they can reimburse an employee for fuel used during business journeys. They can also be used when calculating how much an employee should repay their employer for private fuel provided in a company car.

The rates are reviewed regularly, typically every three months, to reflect changes in fuel and electricity costs.

It is important to remember that Advisory Fuel Rates are not the same as Approved Mileage Allowance Payments (AMAPs). AFRs apply specifically to employees using company cars, whereas AMAPs are used when employees use their own vehicles for business purposes.

Advisory Fuel Rates from 1 September 2026

The new rates are as follows:

Vehicle/fuel type	Engine size	Rate per mile
Petrol	1,400cc or less	14p
Petrol	1,401cc to 2,000cc	17p
Petrol	Over 2,000cc	27p
Diesel	1,600cc or less	15p
Diesel	1,601cc to 2,000cc	16p
Diesel	Over 2,000cc	22p
LPG	1,400cc or less	11p
LPG	1,401cc to 2,000cc	13p
LPG	Over 2,000cc	20p
Electric, home charging	Fully electric cars	7p
Electric, public charging	Fully electric cars	15p

These rates apply from 1 September 2026.

How have the rates changed?

There are several changes compared with the rates that have applied between 1 June and 31 August 2026.

For petrol vehicles, the rate for cars over 2,000cc increases from 26p to 27p per mile.

For diesel vehicles, the rate for cars between 1,601cc and 2,000cc falls from 17p to 16p per mile, while vehicles over 2,000cc fall from 23p to 22p per mile. The rate for diesel vehicles up to 1,600cc remains at 15p.

For LPG vehicles, the rate for cars over 2,000cc falls from 21p to 20p per mile, while the rates for smaller engines remain unchanged.

The electric rates remain unchanged at 7p per mile for home charging and 15p per mile for public charging.

At a glance

Fuel	Previous rate	New rate
Petrol up to 1,400cc	14p	14p
Petrol 1,401cc–2,000cc	17p	17p
Petrol over 2,000cc	26p	27p
Diesel up to 1,600cc	15p	15p
Diesel 1,601cc–2,000cc	17p	16p
Diesel over 2,000cc	23p	22p
LPG up to 1,400cc	11p	11p
LPG 1,401cc–2,000cc	13p	13p
LPG over 2,000cc	21p	20p
Electric, home	7p	7p
Electric, public	15p	15p

What does this mean for employers?

Employers with company car drivers should review their expenses and payroll procedures before the new rates take effect.

For example, if an employee drives a company car with a diesel engine over 2,000cc and completes 500 business miles, the reimbursement using the new AFR would be:

500 miles × 22p = £110

If the employer reimbursed the employee at the previous 23p rate, the equivalent calculation would have been £115.

Using HMRC's published rates can make administering company car fuel expenses relatively straightforward. Where an employer pays no more than the applicable advisory rate, the payment will generally be treated as meeting the employee's business fuel costs without creating a taxable benefit or Class 1A National Insurance liability for the employer.

Can employers use a different rate?

Yes. The Advisory Fuel Rates are not mandatory.

An employer can use its own rate where there is evidence to demonstrate that the actual fuel cost per mile is higher than the HMRC advisory rate. This can be particularly relevant where a vehicle's fuel consumption or the cost of fuel differs significantly from the assumptions used to calculate the official rate.

However, employers should retain appropriate evidence to support the alternative rate.

For many businesses, using HMRC's published rates remains the simplest approach because it provides a consistent method for calculating company car fuel reimbursements.

Electric company cars

The September rates continue to recognise the difference between charging a fully electric company car at home and using a public charger.

The rate is:

• 7p per mile for home charging

• 15p per mile for public charging

Where a company car is charged at both home and public charging points, employers can apportion mileage between the two rates based on the amount of charging undertaken at each location. HMRC says the calculation should be fair and reasonable.

Where an employee can demonstrate that the actual cost per mile of using a public charger is higher than the advisory rate, a higher amount can be used, provided the additional cost can be evidenced.

What about hybrid vehicles?

Hybrid vehicles do not have a separate Advisory Fuel Rate.

HMRC treats hybrid cars as either petrol or diesel vehicles for AFR purposes. The appropriate rate therefore depends on whether the company car is classified as petrol or diesel.

There is a one-month transition period

Employers do not necessarily have to switch to the new rates immediately on 1 September.

HMRC allows businesses to continue using the previous Advisory Fuel Rates for up to one month from the date the new rates take effect. This provides some flexibility for employers updating payroll and expense systems.

However, businesses should still review their processes promptly to ensure the correct rates are being applied going forward.

Don't confuse AFRs with mileage rates for personal vehicles

One of the most important points for employers is understanding which mileage rules apply to which type of vehicle.

Advisory Fuel Rates are for employees using company cars.

Approved Mileage Allowance Payments, meanwhile, apply when employees use their own vehicles for business journeys. The two systems have different rules and should not be used interchangeably. HMRC specifically states that Advisory Fuel Rates must not be used for other circumstances.

What should businesses do now?

Before the September rates take effect, employers should:

1. Review company car fuel rates currently being used for employee expenses.

2. Update payroll and expenses systems with the new rates from 1 September.

3. Check company car records to ensure engine sizes and fuel types are correctly recorded.

4. Review electric vehicle charging arrangements, particularly where employees use both home and public chargers.

5. Check reimbursement policies to ensure they distinguish between company cars and employees' own vehicles.

6. Keep evidence if the business chooses to use rates above HMRC's published advisory rates.

The changes are relatively small, but keeping company car expenses up to date helps businesses avoid unnecessary payroll complications and ensures employees are reimbursed appropriately.

How Styles & Associates can help

Keeping up with changes to payroll, expenses and HMRC reporting requirements can be time-consuming, particularly for businesses with multiple company cars or employees claiming business mileage.

At Styles & Associates, we provide accountancy support to businesses, helping employers manage expenses and their wider financial administration.

If you are unsure which mileage rate applies to your employees, how company car fuel reimbursements should be handled, or whether your current processes need updating, our team can help.

Contact Styles & Associates to discuss how we can support your business.

Key information

New Advisory Fuel Rates: 1 September 2026

Published by: HM Revenue & Customs

Applies to: Employees using company cars

Previous rates: Can be used for up to one month after the new rates take effect

For the full official guidance, see HMRC's Advisory Fuel Rates guidance.

Information correct at the time of publication. Tax and payroll rules can change, so businesses should seek professional advice where they are unsure how the rules apply to their circumstances.