HMRC has updated its advisory fuel rates for company cars with effect from 1 June 2026. These rates are used when employers reimburse employees for business mileage in a company car or when employees repay the cost of private fuel.
If an employer does not provide fuel for private use, the advisory rates can be used to reimburse business mileage without creating a taxable benefit.
| Engine Size | Petrol | Diesel | LPG |
| 1400cc or less | 14p (12p) | – | 11p (10p) |
| 1600cc or less | – | 15p (12p) | – |
| 1401cc to 2000cc | 17p (14p) | – | 13p (12p) |
| 1601cc to 2000cc | – | 17p (13p) | – |
| Over 2000cc | 26p (22p) | 23p (18p) | 21p (19p) |
Previous rates are shown in brackets. Employers may continue to use the previous rates for up to one month after the new rates take effect.
Hybrid vehicles should use the appropriate petrol or diesel rate.
For fully electric vehicles, the advisory rate remains 7p per mile where the vehicle is charged at home and 15p per mile where it is charged using public charging facilities.
Employees Using Their Own Cars
The Approved Mileage Allowance Payment (AMAP) rates for employees using their own vehicle for business journeys increased from 6 April 2026 to:
• 55p per mile for the first 10,000 business miles in the tax year.
• 25p per mile for each business mile over 10,000.
• An additional 5p per mile can be paid for each business passenger carried.
For National Insurance purposes, employers can continue to reimburse at 55p per mile regardless of the total business mileage, as the 10,000-mile threshold does not apply.
VAT Recovery
Where employees are reimbursed using the AMAP rates, employers may be able to reclaim the VAT element relating to the fuel cost, provided they hold a valid VAT receipt from the filling station.
For example, for a diesel company car with an engine size of 1,500cc, the fuel element is 15p per mile, allowing input VAT of 2.5p per mile (15p × 1/6) to be reclaimed.
If you would like advice on mileage claims, company car tax or VAT recovery, please get in touch. A&C Chartered Accountants will be happy to help.