The New Advisory Fuel Rates for Company Cars From 1 June 2026

HMRC’s advisory fuel rates (AFRs) changed from 1 June 2026. The petrol, diesel and LPG rates all increased from the March 2026 figures, while fully electric company cars remain split between 7p per mile for home charging and 15p per mile for public charging.

These rates matter if your business provides company cars, reimburses employees for business fuel, or asks employees to repay private mileage. The previous rates could be used for up to 1 month after 1 June, but the June 2026 figures now apply.

What the new rates are

AFRs apply to company cars only. They are not the same as the mileage rate used when an employee or director uses their own car for business journeys. Using the wrong rate can create payroll, VAT and benefits reporting problems, particularly during an employer compliance review. If you want to understand how those reviews work, read our guide on how an accountant supports you through an HMRC enquiry.

For comparison, the March 2026 petrol rates were 12p, 14p and 22p. Diesel over 2000cc moved from 18p to 23p, and LPG over 2000cc moved from 19p to 21p. You can check the current official figures on the GOV.UK advisory fuel rates page.

Company cars versus your own vehicle

This is the common mistake. AFRs are for company cars. If an employee or director uses their own vehicle for business travel, the Approved Mileage Allowance Payment rate applies instead.

From 6 April 2026, the approved mileage rate for cars and vans is 55p per mile for the first 10,000 business miles in the tax year, then 25p per mile after that. Applying AFRs to a private car, or using the approved mileage rate for a company car, can affect expenses, payroll records, P11D reporting and sometimes the treatment of a director’s loan.

That is why mileage claims should be checked as part of limited company year-end accounts and routine payroll services.

A quick worked example

Say an employee drives a 1600cc petrol company car and records 400 business miles in June 2026. At 17p per mile, the business can reimburse £68 for business fuel.

If the company pays more than the advisory rate, it should be able to show that the actual fuel cost per mile was higher. Mileage logs, fuel receipts and a clear expenses policy are important. Good monthly bookkeeping makes this easier because claims are reviewed while the details are still fresh.

VAT and electric company cars

If the company pays for fuel and reclaims VAT, you still need proper VAT records and receipts. The advisory rate can help identify the fuel element of mileage claims and private mileage repayments, which then feeds into VAT returns.

For fully electric company cars, the June 2026 guidance separates home charging and public charging. Where a journey uses both, the mileage should be apportioned on a fair and reasonable basis. Hybrids are not treated as electric cars for AFR purposes. They are treated as petrol or diesel.

Sole traders are usually in a different position because they often claim mileage for their own vehicle rather than a company car. Our sole trader accounting service and self assessment for sole traders guide explain how this works. Directors deciding whether a company car is worthwhile should also review salary versus dividends in 2026, because company car tax can change the overall calculation.

Frequently asked questions

What are the advisory fuel rates from 1 June 2026?

Petrol rates are 14p, 17p and 26p per mile depending on engine size. Diesel rates are 15p, 17p and 23p. LPG rates are 11p, 13p and 21p. Fully electric company cars use 7p per mile for home charging and 15p for public charging.

Do advisory fuel rates apply to electric cars?

Yes. Fully electric company cars use the advisory electric rates. From 1 June 2026, these are 7p per mile for home charging and 15p per mile for public charging.

Can I still use the old advisory fuel rates?

Only for a limited period. HMRC allows previous rates to be used for up to 1 month after new rates apply. For the June 2026 rates, that meant the old March 2026 rates could only be used until the end of June 2026.

What is the difference between AFR and AMAP?

AFRs cover company cars. AMAP rates cover business mileage in an employee’s own vehicle. From 6 April 2026, the car and van AMAP rate is 55p per mile for the first 10,000 business miles, then 25p per mile after that.

Getting the rates right without the admin

The rates are simple. Keeping them updated across payroll, expenses and VAT every quarter is where mistakes happen. Whether you work with our accountants in Slough or our accountants in Reading, we can help you keep mileage claims, company car records and fuel reimbursements on the right footing.