HMRC Advisory Fuel Rates (AFRs) are the pence-per-mile figures you use to reimburse employees for business travel in a company car, or for staff to repay private fuel. New rates apply from 1 September 2026: petrol over 2000cc rises to 27p, while the top two diesel bands fall by 1p.
If you run a limited company with a company car, or you employ people who drive one, these are the rates that keep fuel reimbursements tax-free and tidy. This guide gives you the full table, explains exactly what changed on 1 September 2026, and walks through a worked example so you can see the numbers in practice.
Advisory fuel rates from 1 September 2026 (full table)
The rates below are the pence-per-mile figures HMRC publishes for company cars only. They are broken down by fuel type and engine size, with a separate Advisory Electricity Rate for fully electric cars split by where you charge.
| Fuel type | Engine size | Rate per mile |
|---|---|---|
| Petrol | 1400cc or less | 14p |
| Petrol | 1401cc to 2000cc | 17p |
| Petrol | Over 2000cc | 27p |
| Diesel | 1600cc or less | 15p |
| Diesel | 1601cc to 2000cc | 16p |
| Diesel | Over 2000cc | 22p |
| LPG | 1400cc or less | 11p |
| LPG | 1401cc to 2000cc | 13p |
| LPG | Over 2000cc | 20p |
| Fully electric | Home charger | 7p |
| Fully electric | Public charger | 15p |
These rates run from 1 September 2026 until the next quarterly review on 1 December 2026. Hybrid cars are treated as either petrol or diesel for AFR purposes, so use the relevant petrol or diesel band for the engine size.
What changed on 1 September 2026?
Compared with the previous rates (which applied from 1 June 2026 to 31 August 2026), three bands moved and the rest held steady:
- Petrol over 2000cc rose from 26p to 27p, up 1p.
- Diesel 1601cc to 2000cc fell from 17p to 16p, down 1p.
- Diesel over 2000cc fell from 23p to 22p, down 1p.
- All other petrol and diesel bands, all LPG bands, and both electric rates were unchanged.
The changes are small, but if you reimburse a lot of business miles they add up, and using the wrong rate can create a taxable profit or a shortfall for the employee.
What are advisory fuel rates used for?
AFRs cover two specific situations, and it helps to be clear which one you are in.
1. Reimbursing an employee for business travel
When an employee drives a company car for work and you pay them for the fuel, paying at or below the advisory fuel rate means there is no taxable profit and no Class 1 National Insurance to worry about. It is a clean, HMRC-approved way to cover business fuel without triggering a benefit charge or extra payroll admin.
2. Repaying the cost of private fuel
If your company pays for all the fuel in a company car, including private mileage, the driver normally faces the car fuel benefit charge, which can be expensive. An employee can avoid it by repaying the full cost of fuel used privately, and the advisory fuel rates are the accepted way to calculate that repayment.
AFRs vs AMAP: which mileage rate applies?
This is where people get caught out. Advisory fuel rates apply to company cars only. If an employee (or a director) drives their own car for business, you do not use AFRs at all: you use Approved Mileage Allowance Payments (AMAP). The two systems cover completely different things.
| Feature | Advisory Fuel Rates (AFR) | Approved Mileage Allowance Payments (AMAP) |
|---|---|---|
| Applies to | Company cars | Employee's own car or van |
| What it covers | Fuel only | Fuel plus wear, insurance and depreciation |
| 2026/27 rate | 7p to 27p depending on fuel and engine size | 55p per mile for the first 10,000 business miles, then 25p per mile |
| Reviewed | Quarterly (1 Mar, 1 Jun, 1 Sep, 1 Dec) | Set as a statutory rate (55p from 6 April 2026) |
| Main purpose | Reimburse business fuel or repay private fuel | Reimburse business mileage in a personal vehicle |
The AMAP rate for 2026/27 is 55p per mile for the first 10,000 business miles, then 25p per mile above that. If you are weighing up whether to run a company car at all or claim mileage in your own vehicle, our guide on company car vs mileage in a limited company compares both routes, and the move to 55p mileage in 2026 explains the AMAP increase in full. You can crunch your own figures with our mileage calculator.
How often are advisory fuel rates reviewed?
HMRC reviews AFRs quarterly and updates them on 1 March, 1 June, 1 September and 1 December each year. The rates track fuel prices and average fuel efficiency, which is why they move by a penny here and there each quarter. It pays to check the current rates at the start of every quarter rather than assuming last quarter's figures still apply.
The one-month transition rule
You are not forced to switch to the new rates on day one. HMRC allows employers to continue using the previous rates for up to one month from the date the new rates take effect. For the 1 September 2026 rates, that means you can keep applying the old June 2026 rates until 30 September 2026 if it is easier for your payroll cycle. From 1 October 2026 onwards, the new rates must be used.
Reclaiming VAT on the fuel element
If your company is VAT-registered, there is a useful bonus. You can reclaim the input VAT on the fuel element of business mileage in a company car, calculated using these advisory fuel rates, as long as you keep enough fuel VAT receipts to cover the amount you reclaim. The receipts do not have to match each journey exactly, but they must be sufficient to support the VAT claimed.
This is easy to overlook and worth getting right, especially across a fleet. Our guide on reclaiming VAT on car leasing and fuel covers the record-keeping HMRC expects.
Worked example: a 1600cc diesel company car
Say one of your employees drives a 1600cc diesel company car and clocks up 400 business miles in September 2026. The diesel rate for 1600cc or less is 15p per mile.
- 400 business miles × 15p = £60
You reimburse the employee £60. Because you have paid at the advisory fuel rate, there is no taxable profit and no Class 1 National Insurance on that payment. The employee is covered for their business fuel, and your payroll stays clean. If your company is VAT-registered, you can also reclaim the VAT element of that £60, provided you hold the fuel receipts to back it up.
Electric company cars: the Advisory Electricity Rate
Fully electric company cars use the Advisory Electricity Rate, and from 1 September 2026 it is split by charging location: 7p per mile for home charging and 15p per mile for public charging. Both were unchanged at the September review. Electric company cars remain highly tax-efficient thanks to their low Benefit-in-Kind rates, which we cover in our guides to electric company car tax and BiK for 2026-27 and company car tax for 2026-27.
How Zmartly can help
Getting mileage, fuel and company-car benefits right is a payroll and reporting job as much as a fuel one, and small errors compound across a team. Zmartly is a CIMA-regulated firm, and our qualified accountants handle it end to end: correct AFR and AMAP treatment, VAT recovery on fuel, and clean reporting to HMRC. Our payroll services keep reimbursements, benefits and RTI submissions accurate every month.
Want a second pair of eyes on your company-car and mileage set-up? Book a free call with Zmartly and we will make sure you are on the right rates and not leaving VAT on the table.
Frequently asked questions
What are the HMRC advisory fuel rates from 1 September 2026?
For company cars, petrol rates are 14p (1400cc or less), 17p (1401cc to 2000cc) and 27p (over 2000cc). Diesel is 15p (1600cc or less), 16p (1601cc to 2000cc) and 22p (over 2000cc). LPG is 11p, 13p and 20p across the same bands. Fully electric cars use 7p for home charging and 15p for public charging.
Do advisory fuel rates apply to my own car?
No. Advisory fuel rates apply to company cars only. If you drive your own car for business, you use Approved Mileage Allowance Payments (AMAP) instead, which are 55p per mile for the first 10,000 business miles in 2026/27 and 25p per mile above that. AMAP covers wear and running costs, not just fuel.
Can I reclaim VAT using advisory fuel rates?
Yes, if your business is VAT-registered. You can reclaim the input VAT on the fuel element of business mileage in a company car, worked out using the advisory fuel rates, provided you keep enough fuel VAT receipts to cover the amount you reclaim.
What is the one-month transition rule for advisory fuel rates?
When new rates take effect, HMRC lets employers keep using the previous rates for up to one month. For the rates that started on 1 September 2026, you can continue using the earlier June 2026 rates until 30 September 2026 if that suits your payroll cycle.
