HMRC released updated Advisory Fuel Rates (AFR) effective from 1 March 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.
While petrol and diesel rates remain steady for this quarter, there are significant shifts in other categories:
- EVs: Rates for public charging have increased to 15p per mile (up from 14p), reflecting the rising costs of on-the-go charging. Home charging rates remain unchanged
- LPG vehicles: Rates across all engine sizes for LPG have decreased
- 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.
If you have questions relating to company cars, tax rates or employee benefits, please get in touch.
