HMRC’s Advisory Fuel Rates (AFRs) apply when reimbursing employees for company car fuel used on business journeys, or when employees repay personal fuel costs where employers have paid for both business and personal fuel. AFRs differ from HMRC’s Approved Mileage Allowance Payments (AMAPs) when personal vehicles are used on business journeys, so correct application is vital to avoid taxable benefits and to remain compliant. The next update is due 1 December 2025.
What are the new rates?
What are the new rates?
The petrol, diesel, LPG and electric fuel rates from 1 June 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 (+1p)
1601cc to 2000cc –13 pence per mile (no change)
Over 2000cc –18 pence per mile (+1p)
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 – 8 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 June 2025 can be used for up to one month from the date that the new rates apply – so until 1 October 2025.
Action for Employers
Review company car fleets, consider fuel/tax advantages of electric vehicles, and maintain accurate records especially when the AFRs for fully electric cars are paid. For advice on compliance, fleet costs, or salary exchange, please contact EmploymentTax@haysmac.com.
