The announcement forms part of HMRC’s regular review of fuel reimbursement guidance, which is used by employers and employees to calculate fuel costs linked to business and private travel in company vehicles. The rates are reviewed four times a year to reflect changes in fuel and electricity prices as well as vehicle efficiency.
HMRC Confirms Latest Advisory Fuel Rates for Company Car Users
According to HMRC’s latest update on advisory fuel rates, the rate for petrol-powered company cars with engine sizes exceeding 2,000cc is set at 26 pence per mile for the period running from 1 June to 1 September 2026.
Advisory fuel rates are calculated using factors such as engine size and fuel type. The system covers petrol, diesel, LPG and electric vehicles. The rates are intended to help employers reimburse staff who use company cars for business journeys while ensuring that payments remain aligned with estimated fuel costs.
The guidance also applies in the opposite direction. Employees who use fuel supplied by their employer for private journeys in a company vehicle may use the advisory rates when repaying those costs. According to HMRC, the rates are designed to support fair reimbursement arrangements without creating additional tax liabilities.
The latest figures represent the rates applicable during the current review period. HMRC reviews advisory fuel rates every three months, with updates typically introduced in March, June, September and December.
Employers Can Use Different Rates if Supported by Evidence
While the advisory figures provide a standard benchmark, employers are not required to use them in every case. According to HMRC guidance, organisations may reimburse fuel at a higher or lower rate if they can demonstrate that the actual fuel cost per mile for a specific vehicle differs from the published advisory rate.
For example, a company may choose a higher reimbursement level if a vehicle consumes more fuel than assumed under the AFR calculations. Equally, a lower rate may be used where a vehicle is particularly fuel-efficient. In either situation, employers must retain evidence showing the vehicle’s actual fuel consumption and associated costs.
The guidance places responsibility on organisations to maintain documentation that supports any departure from the published rates. This allows employers to justify the reimbursement level used should questions arise regarding fuel costs or tax treatment.
HMRC has also stated that when new advisory fuel rates are introduced, employers are generally permitted to continue using the previous rates for up to one month before adopting the revised figures. This transitional period provides businesses with time to update payroll systems and reimbursement processes following each quarterly review.
The current rates, including the 26 pence-per-mile figure for larger petrol company cars, will remain applicable until the next scheduled review takes effect on 1 September 2026. At that point, HMRC will reassess the figures in light of prevailing fuel prices, electricity costs and vehicle efficiency data.
