Last updated: 16 October 2026
What are advisory fuel rates?
Advisory fuel rates (AFRs) are HMRC’s suggested pence-per-mile rates for reimbursing employees who drive company cars for business, or for employees repaying the cost of private fuel. If you use them, HMRC accepts there is no taxable profit and no Class 1A NIC. They are reviewed every quarter, in March, June, September and December.
Rates from 1 September 2026
| Engine size | Petrol | LPG |
| 1,400cc or less | 14p | 11p |
| 1,401cc to 2,000cc | 17p | 13p |
| Over 2,000cc | 27p | 20p |
| Engine size | Diesel | |
| 1,600cc or less | 15p | |
| 1,601cc to 2,000cc | 16p | |
| Over 2,000cc | 22p |
Electric company cars
| Charging | Rate per mile |
| Home charging | 7p |
| Public charging | 15p |
Hybrid cars use the petrol or diesel rate for their engine size.
Using the previous rates
You can continue to use the previous quarter’s rates for up to one month after new rates take effect. Check gov.uk for the December 2026 review.
When to use AFRs
- Reimbursing business mileage in a company car where the employee paid for the fuel
- Employees repaying private fuel so no car fuel benefit charge arises
AFRs do not apply to employees using their own cars. For those, use the approved mileage allowance payments: 55p a mile for the first 10,000 business miles in 2026/27 (up from 45p) and 25p after that.
Worked example
Jordan drives a 1,800cc petrol company car. In October 2026 he drives 600 business miles and pays for the fuel himself. His employer can reimburse 600 × 17p = £102 tax free. If his employer pays for all his fuel, he must repay private fuel at the AFR, or a car fuel benefit charge applies.
The car fuel benefit charge
If an employer provides any fuel for private use and the employee does not repay it in full, a car fuel benefit charge applies. For 2026/27 it is based on £29,200 multiplied by the car’s CO2 percentage. For many cars that is far more than the cost of the fuel itself.
VAT on mileage
Employers can reclaim VAT on the fuel element of mileage payments if they hold VAT receipts for the fuel covering the claim.
Records employers should keep
Keep mileage logs showing the date, journey, purpose and business miles, and the rate used. If you reimburse private fuel repayments, record the amounts repaid and when. Repayments for private fuel must be made by 6 July after the end of the tax year to avoid the fuel benefit charge.
How AFRs are calculated
HMRC bases the rates on average fuel prices and typical fuel efficiency for each engine size. Electric rates use average home and public charging costs. Rates usually move by only a penny or two each quarter.
Frequently asked questions
Do I have to use AFRs?
No. You can pay more if you can show your actual cost per mile is higher.
Do they apply to vans?
No. Vans have separate fuel benefit rules.
Can I use them for my own car?
No. Use the 55p/25p approved mileage rates instead.
What about fuel duty changes?
Fuel duty is 52.95p a litre until 31 December 2026, then due to rise in stages, which may affect future AFRs.
Related: car fuel and mileage allowance, mileage rates for electric and hybrid cars and excess mileage payments.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with company car fuel and mileage rates. See our payroll services service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
