HMRC’s Advisory Fuel Rates Have Changed Again: What Employers Need to Update from 1 September 2026
Advisory Fuel Rates don’t often make headlines, but they’re one of those quietly important numbers that payroll and finance teams need to keep on top of every quarter. HMRC has updated them again from 1 September 2026, and if your company car mileage claims are still running on the old figures, it’s worth a quick check before this month’s payroll run.
What Advisory Fuel Rates actually cover
Advisory Fuel Rates, or AFRs, are the pence-per-mile figures HMRC publishes for employees who drive a company car. They come into play in two situations: when an employer reimburses an employee for business mileage in a company car, and when an employee has to repay their employer for private fuel used in a company car. They’re reviewed regularly, usually every quarter, to reflect changes in fuel prices.
It’s worth being clear that AFRs are not the same as Approved Mileage Allowance Payments, the 45p and 25p rates that apply when someone uses their own car for business travel. AFRs are specifically for company cars, and the rate depends on the vehicle’s fuel type and engine size.
The new rates from 1 September 2026
Petrol and LPG:
- 1,400cc or less: 14p (petrol), 11p (LPG)
- 1,401cc to 2,000cc: 17p (petrol), 13p (LPG)
- Over 2,000cc: 27p (petrol), 20p (LPG)
Diesel:
- 1,600cc or less: 15p
- 1,601cc to 2,000cc: 16p
- Over 2,000cc: 22p
Electric:
- Home charging: 7p
- Public charging: 15p
If you were using the previous quarter’s rates, HMRC allows a one-month grace period, so you can carry on with the old figures for up to a month after the change before you need to have switched over.
Why this matters for employers
The reason these rates are worth getting right, rather than treating as a rounding exercise, is what happens if you don’t. Reimburse mileage at or below the advisory rate and there’s no taxable benefit and no Class 1A National Insurance to worry about. Pay above the rate without solid evidence that your actual fuel costs justify it, and the excess can be treated as taxable earnings, which means tax, employee National Insurance, and potentially employer National Insurance all become due on the difference.
It’s a small thing to miss, but across a fleet of company cars over a full tax year, using an out-of-date rate can add up to a genuine payroll correction, and nobody enjoys explaining an unexpected P11D adjustment to a director.
What to do now
- Update your expenses or payroll software with the new rates as soon as possible.
- Let anyone who drives a company car know the rates have changed, particularly if they submit their own mileage claims.
- If you’re currently paying above the advisory rate, make sure you can evidence why, such as genuinely higher fuel costs for that specific vehicle.
How Pecunia Pro can help
We build quarterly rate changes like this into the payroll runs we manage for clients, so nothing gets missed between HMRC updates. If you’d like us to check your current mileage and fuel reimbursement setup against the new rates, we’re happy to take a look.
Want help getting ahead of this? Call us on 020 8143 1529 or email info@pecuniapro.co.uk and we’ll talk it through.