HMRC has announced an update to its advisory fuel rates (AFR), which are now in effect as of 1 December 2025. The rates are published every quarter and will next be published on 1 March 2026.
AFR is paid when:
- Employees use their company cars and are reimbursed for business travel; or
- Employees need to repay the cost of fuel used for private travel in their company car.
The costs should be distinguished from the approved mileage allowance payment (AMAP) rates which are used by employees using their own vehicles.
There is a significant monetary difference between the AFR and AMAP rates. Therefore, employers need to be aware of applying the appropriate rates depending on whether an employee is using a company car or their own vehicle. This is a common check undertaken by officers during an HMRC Employer Compliance review. It is therefore imperative that the correct rates are applied, and accurate records are kept to support business and private travel mileage. Provided the correct rates are used, no taxable benefit will arise.
What are the new rates?
The petrol, diesel, LPG and electric fuel rates from 1 December 2025 are as follows:
Petrol
Up to 1400cc –12 pence per mile (no change)
1401cc to 2000cc –14 pence per mile (no change)
Over 2000cc –22 pence per mile (no change)
Diesel
Up to 1600cc –12 pence per mile (no change)
1601cc to 2000cc –13 pence per mile (no change)
Over 2000cc –18 pence per mile (no change)
LPG
Up to 1400cc –11 pence per mile (no change)
1401cc to 2000cc – 13 pence per mile (no change)
Over 2000cc – 21 pence per mile (no change)
Fully electric cars*
Advisory electric rate – 7 pence per mile (-1p)
Public charging electric rate – 14 pence per mile (newly introduced)
*Electricity is not considered as car fuel for benefit purposes.
Why two ARF rates for electric cars?
HMRC introduced two separate AFRs for fully electric cars to reflect the real-world cost differences of electricity. Charging at home is generally cheaper, while public chargers, especially slow or fast chargers under 50 kW, are more expensive. By distinguishing the two, HMRC ensures reimbursements are fair, transparent, and aligned with actual costs, while maintaining compliance and avoiding taxable benefit implications.
Hybrid cars
Plug-in hybrid and hybrid cars are treated as petrol or diesel vehicles for the purposes of the AFR.
The previous rates from 1 September 2025 can be used for up to one month from the date that the new rates apply – so until 1 January 2026.
What are the next steps for employers?
It may be a good time to look at your car fleet and consider the fuel and tax advantages of electric cars, especially through a salary exchange arrangement.
If you have any questions about HMRC Employer Compliance Reviews, reviewing fleet car costs or salary exchange, please contact the Employment Tax team at EmploymentTax@haysmac.com
