Every three months HMRC reviews its Advisory Fuel Rates (AFRs) — the recommended pence-per-mile figures that employers use to reimburse staff for business miles driven in a company car, or to charge employees back for fuel used on private journeys. The latest set was published in late May and came into force on 1 June 2026. With pump prices sitting at their highest levels in over three years, almost every rate has been pushed up.
If your mileage payments stay at or below the relevant AFR for your car's fuel type and engine size, there is no taxable profit and no Class 1A National Insurance to worry about. That's what makes these quarterly figures matter to anyone running a company car scheme.
AFR is not the same as the AMAP rate. Advisory Fuel Rates apply only to company cars. If you drive your own car for work, you're covered by the separate Approved Mileage Allowance Payment (AMAP), which rose to 55p a mile for the first 10,000 miles on 6 April 2026. Mixing the two up is one of the most common things HMRC flags during an employer compliance check, so it's worth keeping clear which one applies to you.
The new petrol rates
Petrol rates rose across all three engine bands from 1 June 2026:
| Engine size | Old rate | New rate |
|---|---|---|
| Up to 1400cc | 12p | 14p |
| 1401cc to 2000cc | 14p | 17p |
| Over 2000cc | 22p | 26p |
The new diesel rates
Diesel saw the same upward pressure, with the largest engines gaining 5p a mile:
| Engine size | Old rate | New rate |
|---|---|---|
| Up to 1600cc | 12p | 15p |
| 1601cc to 2000cc | 13p | 17p |
| Over 2000cc | 18p | 23p |
The new LPG rates
Liquefied Petroleum Gas (LPG) vehicles, though far less common on UK roads, also had their rates revised upward:
| Engine size | Old rate | New rate |
|---|---|---|
| Up to 1400cc | 10p | 11p |
| 1401cc to 2000cc | 12p | 13p |
| Over 2000cc | 19p | 21p |
Electric cars: the two-rate split stays
Fully electric company cars continue to use the dual-rate system HMRC introduced in 2025, which recognises that topping up at home is far cheaper than relying on the public network. From 1 June 2026, drivers can claim 7p per mile for home charging and 15p per mile for public charging. Both figures are unchanged from the previous quarter.
One useful point: if you can demonstrate that your actual cost per mile is higher than the advisory electric rate — for example, if you rely on more expensive rapid public chargers — you're allowed to reimburse at that higher real cost. Hybrids, meanwhile, don't get their own rate; they're treated as either petrol or diesel cars depending on the engine.
Why the rates have gone up
HMRC works the AFRs out from recent fuel prices, so the rates are really a lagging mirror of what's been happening at the pump. After a year shaped by the conflict in the Middle East and oil trading back above $100 a barrel, average petrol and diesel prices climbed to their highest in more than three years — and the AFRs have now caught up with that. The rates are reviewed again on 1 September 2026, so if pump prices ease over the summer, some of these figures could come back down.
Separately, drivers who use their own cars for work saw the AMAP rate rise from 45p to 55p a mile for the first 10,000 miles — its first increase in 15 years. The change was announced on 21 May 2026 and backdated to 6 April, so it already applies. If you claim mileage in a personal vehicle rather than a company car, that's the change to read up on.
The practical takeaway: Keep accurate business-versus-private mileage records, and check the AFR table again each quarter rather than setting a rate and forgetting it. If the advisory rate genuinely doesn't cover your fuel cost per mile, you can pay more — provided you can show the real cost. And whatever the headline rate, the single biggest lever on a fuel bill is still where the car is filled up: the gap between the cheapest and dearest forecourts in the same town is often several pence a litre.
Apply the right rate: Using an AFR figure for a privately owned car, or an AMAP figure for a company car, is exactly the kind of error HMRC looks for in an employer compliance review. If you run a scheme, make sure the correct rate is applied for each vehicle type and that the records back it up.