HMRC Advisory Fuel Rates 2026: Current Rates, Electric Split & Quarterly Schedule

HMRC Advisory Fuel Rates from 1 September 2026

These rates apply from 1 September 2026 until HMRC’s next quarterly update, due on 1 December 2026. Employers may keep using the previous quarter’s rates for up to one month after new rates take effect, so until 30 September 2026.

Fuel prices rose sharply over the spring: the June update lifted petrol and diesel rates by 2–5p compared with March 2026 (petrol 12p/14p/22p, diesel 12p/13p/18p). Hybrids have no separate rate; they use the petrol or diesel rate for their engine size. Source: GOV.UK advisory fuel rates, last updated 21 August 2026.

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:

1. 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.

2. 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.

If an employee drives their own car for business, the employer should reimburse at the AMAP rate of 55p per mile — not the AFR. Note that the AMAP rate rose from 45p to 55p on 6 April 2026 (announced 21 May 2026), so payroll policies written before then will be out of date. Both sets of rates are published on GOV.UK in Travel — mileage and fuel rates and allowances. 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

The advisory electricity rate is split into two tiers to reflect the large cost difference between home and public charging. From 1 September 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:

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 27p per mile:

• VAT element: 27p ÷ 6 = 4.5p per mile
• Over 10,000 business miles: £450 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.