HMRC released updated Advisory Fuel Rates (AFR) effective from 1 June 2026, and there are key changes you need to know to avoid unexpected tax hits.
Staying aligned with these rates ensures that fuel reimbursements aren’t treated as taxable income, protecting both the business and the employee from unnecessary National Insurance and benefit-in-kind charges.
This quarter sees increases across petrol, diesel and LPG rates, reflecting higher prices at the pump. Electric vehicle rates remain unchanged:
- Petrol: Rates have increased across all engine sizes, with the smallest engines (1400cc or less) rising to 14p per mile (up from 12p)
- Diesel: Rates have increased across all engine sizes, with the most significant change for over 2000cc vehicles, rising to 23p per mile (up from 18p)
- LPG: Rates have increased across all engine sizes
- EVs: Rates remain unchanged at 7p per mile for home charging and 15p per mile for public charging
- Tax risk: Failing to adjust your rates could lead to a fuel benefit charge, which can add up to £4,000 to a driver’s annual tax bill
Read more in our factsheet, which provides further details on how these changes may affect you.
If you have questions relating to company cars, tax rates or employee benefits, please get in touch.
