Motorists are set to be impacted by new fuel advisory rates confirmed by HMRC, which will take effect in just over a week. On Friday, May 22, HMRC announced the updated advisory fuel rates for petrol, LPG, and diesel cars.
New Rates from June 1, 2026
From June 1, 2026, diesel cars with an engine size of 1600cc or less will face a charge of 15 pence per mile. Vehicles with engines between 1601cc and 2000cc will be subject to a 17 pence per mile rate. However, drivers of cars with engines exceeding 2000cc will encounter a higher rate of 23 pence per mile.
Understanding Advisory Fuel Rates
According to What Car?, every company car driver needs to refuel their vehicle at some point. HMRC's Advisory Fuel Rates (AFRs) enable drivers to calculate how much to claim back from their employer. These AFRs are expressed as pence-per-mile figures and can also be used to reimburse a company for fuel used during private journeys in a fleet vehicle.
It is important to note that there is no taxable profit or Class 1A National Insurance to pay if reimbursements stay at or below the advisory fuel and electric rates for the specific engine size and fuel type of the company car. However, if an employer reimburses more than the AFR or AER but cannot document higher fuel costs per mile, the excess must be treated as taxable profit and earnings, subject to Class 1 National Insurance contributions.
