New Advisory Fuel Rates from HMRC

HM Revenue and Customs (HMRC) has released the latest advisory fuel rates (AFRs) for company cars, which come into effect from 1 June. These rates, used by businesses to reimburse employees for business mileage in company cars, reflect subtle adjustments to account for fluctuations in fuel costs.

Diesel vehicles

Most rates remain unchanged. The only amendment is a minor reduction for vehicles with engines up to 1600cc, dropping from 12 pence per mile (ppm) to 11ppm. Diesel vehicles with engines between 1601cc and 2000cc stay at 13ppm, while those over 2000cc continue at 17ppm.

Petrol-powered company cars

These vehicles see slightly more movement this quarter. Vehicles with engine sizes between 1401cc and 2000cc will now receive 14ppm, down from 15ppm previously. Meanwhile, petrol cars with engines above 2000cc also see a penny reduction, moving from 23ppm to 22ppm. Petrol cars with engines up to 1400cc remain unchanged at 12ppm.

 

Electric vehicles

The advisory electricity rate (AER) for electric vehicles stays fixed at 7ppm. HMRC explains this rate is calculated using an average energy consumption of 3.57 miles per kilowatt hour and a domestic electricity cost of 25.64p/kWh.

LPG vehicles

Rates for LPG-fuelled vehicles are also unchanged: 11ppm for engines up to 1400cc, 13ppm for engines between 1401cc and 2000cc, and 21ppm for engines over 2000cc.

Hybrid cars

These will continue to be treated according to their internal combustion engine type – either petrol or diesel – under AFR guidance.

Employers may adopt alternative mileage rates if they can demonstrate their costs are higher, but these published figures are commonly used across the industry. The new rates apply from 1 June 2025 and will be reviewed quarterly.

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