HMRC advisory fuel rates (AFRs) set the pence-per-mile amounts that employers can use to reimburse company car drivers for business fuel without triggering a taxable benefit. The rates are updated every quarter and apply solely to company cars — employees who drive their own vehicles use the separate AMAP mileage rate instead.
From 1 March 2026, HMRC introduced a notable change: a split advisory electricity rate that distinguishes between home and public charging. This guide covers the full rate tables for Q1 2026, explains how AFRs work in practice, and sets out what employers and employees need to know.
HMRC Advisory Fuel Rates from 1 March 2026
The following rates apply from 1 March 2026 until 31 May 2026. Employers may continue to use the previous quarter’s rates (December 2025) for up to one month after the new rates take effect — so until 1 April 2026.
Petrol rates (unchanged from December 2025)
| Engine size | Rate per mile |
|---|---|
| Up to 1,400cc | 12p |
| 1,401cc – 2,000cc | 14p |
| Over 2,000cc | 22p |
Diesel rates (unchanged from December 2025)
| Engine size | Rate per mile |
|---|---|
| Up to 1,600cc | 12p |
| 1,601cc – 2,000cc | 13p |
| Over 2,000cc | 18p |
LPG rates (reduced by 1–2p per mile)
| Engine size | Rate per mile |
|---|---|
| Up to 1,400cc | 10p |
| 1,401cc – 2,000cc | 12p |
| Over 2,000cc | 19p |
Advisory electricity rate (split rate from March 2026)
| Charging type | Rate per mile |
|---|---|
| Home charging | 7p |
| Public charging | 15p |
The public charging rate rose by 1p from the December 2025 quarter. Home charging remained at 7p. Hybrid vehicles continue to be treated as either petrol or diesel depending on their engine type — there is no separate hybrid AFR.
How Advisory Fuel Rates Work for Company Cars
AFRs exist to solve a specific problem: when an employee pays for fuel in a company car out of their own pocket, the employer needs a way to reimburse them without creating a tax liability. HMRC publishes AFRs as a benchmark. If the employer pays at or below the AFR, no taxable benefit arises and no reporting on P11D is required.
AFRs apply in two main scenarios:
-
Employer reimburses employee for business fuel. The employee fuels the company car privately and the employer pays back business miles at the AFR. This payment is tax-free.
-
Employee repays private fuel to the employer. If the employer provides a fuel card covering all journeys, the employee can repay the private element at the AFR to avoid the fuel benefit charge. The fuel benefit charge multiplier for 2026/27 is £27,800 multiplied by the car’s BIK percentage — a potentially large tax bill that repaying private fuel eliminates.
If an employer pays above the AFR, the excess is a taxable benefit that must be reported on the employee’s P11D, with Class 1A NIC due on the excess. Paying at or below the AFR avoids this entirely.
In both cases, accurate mileage records are essential. Tripbook automatically logs every journey with GPS tracking, making it straightforward to separate business and private miles for AFR calculations.
AFR vs AMAP: When Employers Must Use Each Rate
One of the most common payroll errors is applying the wrong rate. AFRs and approved mileage allowance payments (AMAP) serve entirely different purposes.
| Advisory Fuel Rate (AFR) | AMAP Rate | |
|---|---|---|
| Applies to | Company cars | Employee’s own vehicle |
| Covers | Fuel cost only | All running costs (fuel, insurance, wear) |
| Rate range | 7p – 22p per mile | 45p first 10,000 miles, then 25p |
| Updated | Quarterly (Mar, Jun, Sep, Dec) | Rarely — unchanged since 2011 |
| Tax treatment | No benefit if paid at or below AFR | No benefit if paid at or below AMAP |
If an employee drives their own car for business, the employer should reimburse at the AMAP rate of 45p per mile — not the AFR. Paying a company car driver at the AMAP rate, conversely, would create a taxable overpayment because AMAP includes wear and insurance costs the employer already bears.
The New Split Advisory Electricity Rate Explained
Before September 2024, HMRC applied a single flat advisory electricity rate (AER) for all electric company cars. The current system splits the rate into two tiers to reflect the significant cost difference between home and public charging.
From 1 March 2026:
- Home charging: 7p per mile — covers the electricity cost when the employee charges at a domestic socket or home wallbox.
- Public charging: 15p per mile — reflects the higher per-kWh cost at public rapid and ultra-rapid chargers.
This matters for fleet managers because a driver who relies on public charging has more than double the fuel cost per mile compared to one who charges at home. The split rate ensures neither driver is over- or under-reimbursed.
For employees with an electric company car, keeping a record of where each charge takes place is now just as important as logging the miles. Tripbook records every trip automatically, giving you a clear mileage log to support whichever charging rate applies. For more on electric company car taxation, see our guide on electric company car tax in the UK.
Quarterly Update Schedule and VAT Reclaim
HMRC publishes new AFRs four times a year on set dates:
| Quarter | Effective from | Effective until |
|---|---|---|
| Q1 | 1 March | 31 May |
| Q2 | 1 June | 31 August |
| Q3 | 1 September | 30 November |
| Q4 | 1 December | 28/29 February |
Each time new rates are published, employers have a one-month grace period to adopt them. During this window, either the old or the new rates may be used. After the grace period, only the current quarter’s rates are valid.
For payroll teams, this means quarterly rate reviews should be diarised. Using outdated rates beyond the transition window could result in overpayments that HMRC treats as taxable benefits — a common finding during employer compliance inspections.
Reclaiming VAT on Advisory Fuel Rate Payments
VAT-registered businesses can reclaim the VAT element on fuel used for business journeys in company cars. The calculation uses the AFR as a proxy for actual fuel cost:
VAT reclaim per mile = AFR rate ÷ 6
For example, a petrol company car with an engine over 2,000cc at the current AFR of 22p per mile:
- VAT element: 22p ÷ 6 = 3.67p per mile
- Over 10,000 business miles: £367 reclaimable
Only the business mileage proportion qualifies. You must hold a valid VAT fuel receipt and have accurate mileage records that meet HMRC requirements. Tripbook generates exportable mileage reports that make supporting a VAT fuel reclaim straightforward. For a detailed walkthrough, read our guide on reclaiming VAT on mileage in the UK.
Summary
HMRC advisory fuel rates for Q1 2026 (1 March to 31 May) are the benchmark for tax-efficient company car fuel reimbursement. The key points to remember:
- Petrol and diesel rates are unchanged from December 2025 (12p–22p for petrol, 12p–18p for diesel)
- LPG rates dropped by 1–2p across all engine sizes
- Electric vehicles now use a split rate: 7p per mile for home charging and 15p for public charging
- AFRs cover fuel only and apply exclusively to company cars
- Employees using their own vehicles should claim at the AMAP rate (45p/25p), not the AFR
- VAT-registered businesses can reclaim the VAT element on business fuel at AFR ÷ 6
- Rates are updated quarterly — the next update takes effect on 1 June 2026
Accurate mileage records underpin every AFR claim. Download Tripbook from the App Store to log business journeys automatically and keep your company car fuel reimbursement fully compliant.
