HMRC has published the latest advisory fuel and electric rates (AFRs) for company cars, effective from 1 March 2026. Several rates have changed since the previous quarter. What should employers be aware of?
AFRs are used where employers reimburse employees for business travel in company cars, or where employees repay the cost of fuel used for private travel. Reimbursements at or below the advisory rate are not treated as taxable earnings and do not incur NI. The rates applying from 1 March 2026 are as follows (previous rates in brackets where changed):
Petrol and LPG
| Engine size | Petrol | LPG |
|---|---|---|
| 1,400cc or less | 12p | 10p (11p) |
| 1,401cc to 2,000cc | 14p | 12p (13p) |
| Over 2,000cc | 22p | 19p (21p) |
Diesel
| Engine size | Diesel |
|---|---|
| 1,600cc or less | 12p |
| 1,601cc to 2,000cc | 13p |
| Over 2,000cc | 18p |
Electric
| Charging location | Rate |
|---|---|
| Home charger | 7p |
| Public charger | 15p (14p) |
Petrol and diesel rates remain unchanged, but LPG rates have reduced across all engine sizes. The advisory electric rate for public charging has increased to reflect higher charging costs. Employers may continue to use the previous rates for up to one month after 1 March 2026. Payroll and expense systems should now be updated to ensure the correct rates are applied. Where reimbursements exceed the advisory rate, employers must be able to demonstrate that the higher amount reflects the actual cost per mile to avoid income tax and NI implications.
