First, what these rates are not: Advisory fuel rates are not a charge, a tax or a fee. Nobody pays HMRC anything because of them. They are the pence-per-mile figures an employer uses to reimburse an employee for business fuel in a company car, or to recover the cost of private fuel from them. HMRC's guidance states plainly that they must not be used in any other circumstances. If you drive your own car, these rates do not apply to you — you're on the separate 45p and 25p mileage allowance rates.
What actually changed on 1 September
HMRC published the new rates on 21 August and they took effect today. Four rates moved. Three of them went down.
- Petrol over 2000cc: up from 26p to 27p a mile.
- Diesel 1601cc to 2000cc: down from 17p to 16p a mile.
- Diesel over 2000cc: down from 23p to 22p a mile.
- LPG over 2000cc: down from 21p to 20p a mile.
Everything else held steady: petrol stays at 14p up to 1400cc and 17p from 1401cc to 2000cc, diesel stays at 15p up to 1600cc, and LPG stays at 11p and 13p for the two smaller bands. The advisory electric rate is unchanged at 7p a mile for home charging and 15p for public charging. Hybrids are treated as either petrol or diesel depending on the engine.
Employers can carry on using the June rates for up to one month from today, which gives payroll and expense systems time to catch up. The next review lands on 1 December 2026.
Now the part nobody is reporting
HMRC doesn't just publish the rates. It publishes the arithmetic behind them — the assumed miles per gallon for each engine band, and the fuel price it used. For this quarter those prices are:
HMRC's petrol assumption is about 1.7p a litre below the current official average. Its diesel assumption is about 3.6p a litre below. And it's the diesel rates that were cut.
To be fair to HMRC, this is largely structural rather than deliberate. The rates are set quarterly from Department for Energy Security and Net Zero data available at the time of the review, so there is always a lag between the snapshot and the day the rates go live. It just happens that this quarter the lag runs in one direction, and diesel has been climbing while the calculation was being finalised.
What the gap is worth per mile
HMRC's method is public, so we can run it again with current prices. Take the assumed miles per gallon for each band, apply the real pump price instead of the assumed one, and compare against the rate actually being paid.
- Diesel 1601cc to 2000cc: the real cost works out at roughly 16.8p a mile. The rate paid is 16p. Shortfall of about 0.8p a mile.
- Diesel over 2000cc: roughly 22.7p a mile against a rate of 22p. Shortfall of about 0.7p a mile.
- Petrol up to 1400cc: roughly 14.5p a mile against a rate of 14p. Shortfall of about 0.5p a mile.
- Petrol over 2000cc: almost exactly on the money at around 27p. The increase to 27p has landed well.
- Diesel up to 1600cc: slightly generous, at roughly 14.9p a mile against a 15p rate.
What that means over a year: A company car driver covering 12,000 business miles in a 1.8-litre diesel is around £90 a year short at the new rate. At 20,000 miles it's closer to £150. For a large diesel it's roughly £85 and £140 respectively. Not enormous, but it is real money, and it moves in the wrong direction for the exact drivers whose rate was just cut.
The bit that's genuinely useful to know
Advisory rates are a safe harbour, not a cap. HMRC's guidance is explicit that if your fuel cost per mile is higher than the advisory rate, a higher rate can be paid — you simply have to be able to show the cost. Reimburse at or below the advisory rate and there's no taxable profit and no Class 1A National Insurance to worry about. Go above it and you need the evidence, but the option is there.
The same principle applies to electric company cars. HMRC calculated the 15p public charging rate using an average of 54p per kilowatt-hour for slow and fast chargers under 50kW. Anyone routinely using rapid or ultra-rapid chargers will be paying well above that, and the guidance specifically allows a higher rate where the cost per mile can be demonstrated. Where charging is split between home and public, the mileage can be apportioned, provided the split is fair and reasonable.
So if you run a small fleet, or you're an employee doing serious diesel mileage, the practical takeaway is this: the advisory rate is a floor you can rely on without paperwork, not a ceiling on what you're entitled to. Keeping receipts for a couple of months is usually all the evidence a claim needs.
Worth doing this quarter:
- Check which band you're actually in. The 1601–2000cc diesel band covers a very large share of company cars, and it's the one with the widest gap right now.
- Work out your real cost per mile. Our journey cost calculator and fuel calculators will do it from your own mpg and local prices rather than a national assumption.
- Track the actual average. The UK Fuel Price Index carries the same weekly government figures HMRC uses, so you can see the gap open or close before the December review.
- Fill cheaper to close the gap yourself. If the rate is fixed, the only variable left is what you pay at the pump. Comparing before each fill is worth more than the 0.8p a mile in dispute.
- Fleet drivers: check your card. Our guide to fuel cards covers how the network you're tied to affects the price you actually pay.
And on those headlines
It's worth restating, because the framing has travelled a long way today. No new charge has been introduced. No private motorist is affected. Three of the four changes were reductions in what employers reimburse, and one was an increase. The story is a routine quarterly adjustment — the interesting part is only visible if you read HMRC's assumptions rather than its headline table, and it's that the diesel figures were cut using a price lower than diesel currently costs.
Sources: advisory fuel rates and the underlying mpg and fuel price tables are from HMRC's advisory fuel rates guidance, last updated 21 August 2026. Pump prices are the Department for Energy Security and Net Zero weekly road fuel price statistics for the week commencing 24 August 2026. Per-mile figures are our own calculation using HMRC's published method and mpg assumptions with current pump prices, and are rounded. Rates change again on 1 December 2026.