HMRC Advisory Fuel Rates

Last Updated: 28/03/2025

If your business reimburses employees for using a company car, or if you operate one yourself, Advisory Fuel Rates (AFRs) are a key tool to keep you on the right side of HMRC. Updated quarterly to reflect fuel prices, these rates simplify the process of tax-free mileage claims for fuel used on business journeys.

In this guide, we’ll walk you through the current AFRs, explain what the Advisory Electricity Rate (AER) is, and clarify who can use these rates, how they’ve changed, and whether you’re obligated to follow them.

What Are Advisory Fuel Rates?

Advisory Fuel Rates (AFRs) are mileage rates set by HMRC that employers can use to:

• Reimburse employees for fuel used in company cars during business travel

• Calculate repayments when an employee uses company fuel for private journeys

Using AFRs helps employers avoid creating a Benefit in Kind (BiK) charge and simplifies payroll and tax compliance. These rates are only for company cars, not privately owned vehicles (which fall under Approved Mileage Allowance Payments instead).

What Are the Current Advisory Fuel Rates?

The following AFRs apply to company car journeys made. Rates vary depending on engine size and fuel type.

Petrol                                       

• Up to 1400cc: 12p per mile (unchanged)

• 1401cc to 2000cc: 15p per mile (up from 14p)

• Over 2000cc: 23p per mile (unchanged)

Diesel

• Up to 1600cc: 12p per mile (up from 11p)

• 1601cc to 2000cc: 13p per mile (unchanged)

• Over 2000cc: 17p per mile (unchanged)

LPG (Liquefied Petroleum Gas)

• Up to 1400cc: 11p per mile (unchanged)

• 1401cc to 2000cc: 13p per mile (unchanged)

• Over 2000cc: 21p per mile (unchanged)

What Is the Current Advisory Electricity Rate (AER)?

For fully electric company cars, HMRC has set the Advisory Electricity Rate (AER) at 7p per mile as of 1 March 2025. This rate is intended to reflect average domestic electricity prices and can be used by employers to reimburse electric vehicle drivers for business mileage.

If electricity is reimbursed at a higher rate than 7p per mile, businesses must provide evidence that this reflects actual electricity costs — or risk a tax charge.

How Have the Rates Changed From 1 March 2025?

The March 2025 update brought two main changes:

• Petrol vehicles (1401cc–2000cc) increased from 14p to 15p per mile

• Diesel vehicles (up to 1600cc) increased from 11p to 12p per mile

All other rates remain unchanged, including LPG and electric vehicle rates. HMRC typically reviews AFRs every quarter — March, June, September, and December — to reflect fluctuations in fuel costs.

Who Can Use the HMRC Advisory Fuel Rates?

AFRs are designed for:

• Employers reimbursing staff for business use of company cars

• Employees who repay employers for the private use of company fuel

• Fleet managers and payroll teams needing to calculate accurate and compliant mileage expenses

These rates cannot be used for personal vehicles used for work purposes (such as when an employee uses their own car for a client visit). Those situations are covered by Approved Mileage Allowance Payments (AMAPs).

Do You Have to Use the Set Advisory Fuel Rates?

No — you’re not legally required to use the exact HMRC AFRs, but there’s a catch.

If you use higher rates, you must be able to prove that they reflect the actual cost per mile (e.g. by providing fuel receipts, average consumption rates, and mileage data). If you reimburse more than the advisory rate without evidence, the excess amount will likely be treated as a taxable benefit for the employee, which can create additional tax and National Insurance liabilities.

If you use lower rates, employees may claim tax relief on the shortfall.

Most businesses choose to stick with the published AFRs for simplicity and compliance.

Final Thoughts

The Advisory Fuel Rates offer a practical solution for reimbursing business mileage in company vehicles without triggering tax consequences. By sticking to the published AFRs — or clearly evidencing any variations — employers can keep payroll clean and compliant while ensuring employees are fairly reimbursed.

With rates updated quarterly, staying current is essential. If you manage a fleet, run payroll, or use a company car, bookmark HMRC’s guidance and check in regularly.