HMRC New Road Fuel Rates – What Employers Need to Know

What are the latest HMRC advisory fuel rates?

Advisory fuel rates represent the amount per mile that employers can pay employees for business journeys in a company vehicle without creating a tax liability. HMRC publishes these rates quarterly, and they apply during a specific three-month window. For the period from 1 March 2026 to 1 June 2026, employers may use either the new rates or the previous set until 1 April 2026, after which only the updated figures apply.

The rates work by engine size rather than specific vehicle models, which simplifies record-keeping for both employers and staff. Below is an overview of the current advisory fuel rates for different fuel types.

Key points from the current update include that petrol rates remain unchanged across all engine categories, and diesel rates similarly show no change from the previous quarter. LPG rates have decreased by 1p per mile for smaller engines and 2p per mile for larger engines, which reflects adjustments in fuel price differentials.

• Petrol rates for all engine sizes have remained stable since the previous quarter.
• Diesel rates show no change across the three engine categories.
• LPG rates have decreased by 1p to 2p per mile depending on engine size.
• Hybrid vehicles use the petrol or diesel rates based on their engine size.
• Employers may continue using the previous quarter’s rates until 1 April 2026.
• Electric vehicle rates differ based on charging location.

What are the HMRC advisory fuel rates from 1 March 2026?

The update published for the period beginning 1 March 2026 brings clarity to the direction of travel for company car fuel reimbursement. HMRC sets these rates based on fuel price data and reviews them every three months, meaning the next change could arrive in June 2026. Fleet managers and company car users should monitor these updates to ensure their reimbursement systems reflect current guidance.

Petrol and LPG vehicle rates

For petrol vehicles, the 1,400cc and under category maintains a rate of 12p per mile, with the 1,401 to 2,000cc bracket holding at 14p per mile. Vehicles with engines over 2,000cc continue at 22p per mile. These figures represent no movement from the previous quarter, indicating a period of relative stability in petrol pricing that HMRC has reflected in its advisory rates.

LPG rates have experienced decreases across categories. The smallest engines dropped to 10p per mile, while mid-range engines sit at 12p per mile. Larger LPG vehicles now sit at 19p per mile, down from 21p previously.

Diesel vehicle rates

Diesel rates continue to show consistency with no changes across engine categories. Vehicles with engines up to 1,600cc are reimbursed at 12p per mile, those between 1,601 and 2,000cc at 13p per mile, and vehicles exceeding 2,000cc at 18p per mile.

These rates apply to employees using company-owned or company-leased vehicles for business journeys. Private journeys fall outside the scope of advisory fuel rate reimbursement, though they may trigger separate benefit-in-kind considerations for tax purposes.

How do HMRC mileage rates apply to company cars?

Company car taxation operates on a dual track system where advisory fuel rates handle business mileage reimbursement while separate rules address the private use element. Employers reimbursing employees at or below the advisory rate for business miles create no income tax liability for the employee. If an employer pays above the advisory rate, the excess becomes taxable income for the employee.

The reimbursement covers the business portion of driving. Employees undertaking commuting or personal trips in a company car face a different calculation through the benefit-in-kind system, which values private usage based on the vehicle’s list price, its CO2 emissions, and the fuel type. This is distinct from the mileage reimbursement that covers actual business travel.

Record-keeping and practical application

Employers typically maintain mileage logs that record the date, destination, mileage, and purpose of each business journey. These records support the tax-free nature of the reimbursement and provide evidence if HMRC ever reviews the arrangement. Some employers use app-based solutions, while others rely on manual logbooks or spreadsheet records.

When an employee uses a company car exclusively for business, the reimbursement via advisory fuel rates covers the full cost of fuel attributable to work driving. When private use occurs, the employer may need to account for the benefit-in-kind value separately, and the employee may need to reimburse the employer for any private fuel provided.

The advisory fuel rates serve a specific purpose within this system, and understanding their boundaries helps both employers and employees navigate the requirements correctly. Advisory fuel rates published on GOV.UK provide the authoritative figures that apply during each quarter.

What are HMRC rates for electric and hybrid cars?

Electric vehicles operate under a distinct framework because electricity does not qualify as fuel for car fuel benefit purposes, meaning advisory electric rates serve a different function from petrol and diesel equivalents. HMRC sets two separate rates depending on where the vehicle charges, with the home charging rate remaining stable and the public charging rate increasing by 1p per mile.

The increase in the public charging rate to 15p per mile reflects the growing cost differential between home and public charging infrastructure. Employees who charge primarily at public stations receive the higher rate, while those with home charging arrangements receive the lower 7p rate. Drivers using both methods must apportion their mileage accordingly.

Hybrid vehicle treatment

Hybrid vehicles follow the same advisory fuel rate structure as their conventional counterparts, with the rate determined by engine size rather than the electric component. A plug-in hybrid with a 1,500cc engine uses the 1,401 to 2,000cc petrol rate of 14p per mile for business mileage reimbursement. This approach ensures consistency regardless of whether the driver used petrol, diesel, or electric power during a particular journey.

The rationale behind this approach is that hybrid vehicles retain internal combustion engines capable of running on petrol or diesel, and the advisory rates apply to those fuel types. The electric component does not receive separate treatment for mileage reimbursement purposes.

As the UK fleet transitions toward electric vehicles, HMRC continues to adjust these rates to reflect market conditions. The home charging rate has remained at 7p per mile since the previous update, while public charging infrastructure costs have pushed the public rate upward by a penny for the current quarter.

Timeline of recent HMRC advisory fuel rate updates

Advisory fuel rates undergo review four times per year, with changes typically taking effect on 1 March, 1 June, 1 September, and 1 December. This quarterly cadence allows HMRC to respond to fuel price movements without causing excessive disruption to employer systems.

1. 1 December 2025 — Previous quarter’s rates took effect, establishing baseline figures for winter fuel costs.
2. 1 March 2026 — Current update period begins; previous rates remain usable until 1 April 2026.
3. 1 April 2026 — Transition period ends; only the new rates from 1 March 2026 apply.
4. 1 June 2026 — Next scheduled update; rates may change based on fuel market conditions.
5. 1 May 2026 — VAT road fuel scale charges update for the 2026-27 tax year, affecting private fuel benefit calculations.

The overlap between quarter-end dates and rate applicability creates a brief transition window that benefits employers updating their systems. Rather than requiring immediate switchover, HMRC permits the previous rates to remain valid for one additional month, reducing the risk of payment errors during the transition.

Confirmed information versus areas requiring further clarification

The following summary distinguishes between what is established and what remains subject to interpretation or further guidance from HMRC sources.

The quarterly cadence means these rates will continue evolving. Businesses relying on these figures for budget planning should build in contingencies for the June 2026 update, when HMRC will publish revised rates based on the latest market data. Advisory fuel rates on GOV.UK remain the authoritative source for current and historical figures.

Why HMRC advisory fuel rates matter for UK drivers and employers

The advisory fuel rate system serves as the practical mechanism for reimbursing business travel without creating tax complications. Without established benchmarks, employers and employees would need to negotiate individual rates, creating inconsistency and potential disputes. HMRC’s quarterly updates ensure the rates reflect current fuel costs, maintaining their utility as the tax-free threshold for mileage payments.

For employees, the benefit is straightforward: receiving reimbursement at advisory rates means no taxable income arises from the employer-provided mileage payment. For employers, the system provides certainty that their reimbursement arrangements satisfy HMRC requirements while supporting accurate record-keeping.

The interaction with benefit-in-kind taxation adds another layer of complexity for company car users. An employee who receives advisory rate reimbursement for business miles still faces potential benefit charges for private use of the vehicle. The advisory rates address one aspect of company car costs while separate rules govern the valuation of private use, creating a two-part framework that requires attention to both components.

As electric vehicles become more prevalent in company car fleets, the distinction between electric rates and conventional fuel rates highlights the ongoing adaptation of the system. The different rates for home and public charging acknowledge the varied infrastructure employees encounter, while the stable home charging rate provides certainty for those with dedicated home charging arrangements.

Primary sources and official references

HMRC publishes advisory fuel rates on GOV.UK, where the official tables serve as the authoritative reference for employers and their advisers. The rates undergo quarterly review, with updates announced in advance of each new period.

Advisory fuel rates are intended to reflect the average fuel costs of a particular type of vehicle. Employers may use these rates or pay a lower rate. If they pay more than the advisory rate, the excess is taxable.

— HMRC guidance on advisory fuel rates

Additional sources that track and explain these rates include accountancy firms that publish analysis of each quarterly update, vehicle leasing companies that incorporate the rates into their fleet management services, and specialist publications that compare the figures across periods. The VAT road fuel scale charges from 1 May 2026 to 30 April 2027 tables provide the complementary information needed for employers accounting for private fuel benefits.

The weekly road fuel prices published by the government provide additional context, showing the market movements that ultimately influence HMRC’s quarterly decisions. These figures demonstrate the price environment that drives the advisory rate calculations.

Summary: Key points to remember about HMRC advisory fuel rates

HMRC advisory fuel rates from 1 March 2026 show petrol and diesel rates unchanged, with LPG rates decreasing by 1p to 2p per mile depending on engine size. Electric vehicle rates remain differentiated by charging location, with home charging at 7p per mile and public charging at 15p per mile. The transition period until 1 April 2026 allows employers to continue using the previous quarter’s figures before moving to the updated rates.

Employers reimbursing employees at advisory rates ensure tax-free mileage payments for business journeys. The separate benefit-in-kind system addresses private use of company vehicles, and VAT road fuel scale charges from 1 May 2026 account for private fuel in business vehicles. Electric vehicles benefit from a simplified VAT treatment that does not apply car fuel benefit charges.

The quarterly review cycle means these figures will change again in June 2026, and businesses managing company car arrangements should maintain systems capable of absorbing updates on a regular schedule. For authoritative figures, Advisory fuel rates on GOV.UK provide the current benchmarks that employers should apply.

Frequently asked questions