Hm revenue and customs (HMRC) is preparing to announce updated advisory fuel rates (AFRs) that will apply from 1 september 2025. these rates are reviewed on a quarterly basis — in march, june, september, and december — and apply to company car drivers using petrol, diesel, LPG, or electric vehicles.
According to gb news, the forthcoming adjustments will follow the standard process for setting mileage reimbursement figures and may influence payments for both business and private travel fuel costs. the official hmrc figures are designed to provide a consistent benchmark for employers and employees when calculating eligible fuel expense claims.
Scope and Use of Advisory Fuel Rates
According to HMRC, advisory fuel rates (AFRs) are used by employers for two primary purposes: to reimburse employees for business travel in their company cars and to calculate repayment amounts when employees cover the cost of fuel used for private journeys.
If the mileage rate reimbursed is no higher than the AFRs for the specific engine size and fuel type, employees do not have to pay class 1a national insurance on the amount.
This rule helps avoid additional costs for both employers and employees while ensuring compliance with tax regulations.
Recent Changes From June 1, 2025
The last update, which came into effect on 1 June 2025, introduced specific reductions for several vehicle categories. Petrol cars with engines between 1,401cc and 2,000cc saw a decrease of 1p per mile, moving from 15p to 14p, while petrol cars over 2,000cc also dropped by 1p, from 23p to 22p.
Diesel vehicles up to 1,600cc experienced a reduction of 1p per mile, going from 12p to 11p. The rates for LPG and electric vehicles remained unchanged.
Current Advisory Fuel Rates (From June 1, 2025)
the following figures, set by Hmrc, represent the official mileage reimbursement amounts for company cars based on engine size and fuel type.
Petrol
- up to 1,400cc – 12p per mile
- 1,401cc to 2,000cc – 14p per mile
- over 2,000cc – 22p per mile
Diesel
- up to 1,600cc – 11p per mile
- 1,601cc to 2,000cc – 13p per mile
- over 2,000cc – 17p per mile
LPG
- up to 1,400cc – 11p per mile
- 1,401cc to 2,000cc – 13p per mile
- over 2,000cc – 21p per mile
Electric
- all models – 7p per mile
How HMRC Calculates the Fuel Rates
the fuel rates for petrol and diesel are based on average pump prices reported by the department for energy security and net zero (DESNZ).
LPG figures are supplied by the automobile association, while the electric vehicle rate is calculated from a mix of data provided by DESNZ, the office for national statistics, the department for transport, and annual company car sales figures.
HMRC treats hybrid vehicles as either petrol or diesel depending on the main engine type.
