New HMRC Advisory Fuel Rates Effective from 1 June 2026
HMRC has published its latest Advisory Fuel Rates (AFRs), which came into effect on 1 June 2026. These rates are used by employers and employees to calculate fuel reimbursements for business journeys made in company cars and to determine fuel costs relating to private mileage.
The updated rates include changes across several petrol, diesel and LPG vehicle categories, with some rates increasing and others decreasing depending on engine size and fuel type. The rate for fully electric vehicles remains unchanged at 7 pence per mile.
What Are Advisory Fuel Rates?
Advisory Fuel Rates are issued quarterly by HMRC and provide guidance on the amount employers can reimburse employees for business mileage in company cars without creating a tax liability.
The rates can also be used when employees need to repay fuel costs for private journeys where their employer provides fuel.
Why do they matter?
Using the correct Advisory Fuel Rates helps businesses:
- Reimburse employees fairly for business travel
- Ensure mileage payments remain tax-efficient
- Avoid potential tax and National Insurance issues
- Stay compliant with HMRC guidance
- Accurately account for fuel provided for private use
What should employers do now?
If your business operates company vehicles, it is important to review your current mileage reimbursement processes and ensure that any payments made from 1 June 2026 reflect the updated rates.
Employers should also check that payroll and expense systems have been updated where necessary to prevent overpayments or underpayments.
Need advice?
Keeping up with HMRC updates can be challenging, particularly for businesses managing multiple company vehicles.
If you would like guidance on Advisory Fuel Rates, mileage claims, company car tax, or any other business tax matters, our team is here to help. Get in touch with Armstrongs Accountants to discuss your requirements and ensure your business remains fully compliant.
