Using the advisory fuel rates - Landlords Financial | Landlords Bookkeeping Accountants

HMRC publish mileage rates for petrol, LPG and diesel and electric cars. The rates are known as the advisory fuel rates and are updated quarterly with effect from 1 March, 1 June, 1 September and 1 December. The rates are fuel-only rates, which can be used either to reimburse employees for fuel used for business travel in a company car or where an employee needs to repay the cost of fuel used for private journeys in a company car. For petrol, LPG and diesel cars, the rate depends on the engine size, whereas for electric cars the rate depends on whether the car was charged at a home charger or a public charger.

The rates applying from 1 June 2026 are as follows:

Engine size	Petrol (rate per mile)	LPG (rate per mile)
1,400cc or less	14 pence	11 pence
1,401 cc to 2,000cc	17 pence	13 pence
Over 2,000cc	26 pence	21 pence

Engine size	Diesel (rate per mile)
1,600cc or less	15 pence
1,601cc to 2,000cc	17 pence
Over 2,000cc	23 pence

Charging location	Electric (rate per mile)
Home charger	7 pence
Public charger	15 pence

Reimbursing business travel

The rates can be used to reimburse an employee for business travel in a company car without a tax charge arising on the reimbursement. There will be no Class 1A National Insurance for the employer to pay either.

The employer does not have to use the advisory rates and can set their own rates instead. However, if the amount paid exceeds the advisory rates and the employer cannot show that the actual costs are higher than the advisory rates (and equal to the amount paid), the excess over the amount due at the advisory rates is taxable and must be included in earnings for Class 1 National Insurance purposes.

The rates should not be used to reimburse business travel in an employee’s own car. Instead, Approved Mileage Allowance Payments rates should be used. These are higher as they include an element for the costs of wear and tear, servicing and insurance.

Repaying private travel

If an employee has a company car other than an electric car, a fuel benefit tax charge will arise if the employer meets the cost of private travel. This is an all or nothing charge – the charge will apply if the employer meets the cost of any private mileage in the year. The charge can be significant as the amount charged to tax is found by applying the appropriate percentage used to work out the company car benefit by the multiplier for the year, which for 2026/27 is set at £29,200.

To avoid the charge, the employee must make good the cost of all fuel for private journeys. The amount which the employee will need to reimburse can be calculated using the advisory fuel rates. To eliminate the charge, the cost of private fuel must be repaid no later than 31 May after the end of the tax year if the benefit is payrolled and no later than 6 July after the end of the tax year if it is returned on the P11D.

The advisory rates do not need to be used if it can be shown that the employee has met the full cost of fuel for private travel by reimbursing at a lower rate.

There is no fuel benefit charge if the employer meets the cost of electricity for private journeys in an electric car, so reimbursement is not needed here.

Using the advisory fuel rates - Landlords Financial | Landlords Bookkeeping Accountants

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