New HMRC Fuel Rates Come into Effect: What You Need to Know
As of today, June 1, 2025, new advisory fuel rates (AFRs) have been introduced by HM Revenue and Customs (HMRC), which could impact how much company car users pay to drive. According to a report by GB News, the changes will affect employees being reimbursed for business travel in their company cars or those who need to repay the cost of fuel used for private travel.
The AFRs, which are updated four times a year, apply to employees using company cars for business purposes. If the mileage rate is not higher than the AFR for the engine size and fuel type of their company car, there will be no taxable profit. Additionally, drivers will also avoid the need to pay Class 1A National Insurance when operating their company car. As GB News reports, the latest AFR update will see owners of petrol cars benefit from reduced rates per mile.
The new rates will affect petrol, diesel, and electric vehicle drivers differently. Petrol car owners will see a reduction in rates, with engines up to 1,400cc remaining at 12p per mile, those between 1,401cc and 2,000cc reduced to 14p per mile, and those over 2,000cc reduced to 22p per mile. Diesel car owners will also see changes, with engines up to 1,600cc reduced to 11p per mile, those between 1,601cc and 2,000cc remaining at 13p per mile, and those over 2,000cc remaining at 17p per mile.
Electric vehicle drivers will continue to be reimbursed at a rate of 7p per mile, while Liquefied Petroleum Gas (LPG) vehicle drivers will remain on the same rates as before: 11p per mile for engines up to 1,400cc, 13p per mile for those between 1,401cc and 2,000cc, and 21p per mile for those over 2,000cc. As GB News notes, the MPG used to calculate the rate for LPG vehicles is 20 per cent lower than for petrol, due to its lower volumetric energy density.
The rates are calculated using data from various government departments, including the Department for Energy Security and Net Zero (DESNZ), the Office for National Statistics (ONS), and the Department for Transport (DfT). Petrol and diesel rates are based on forecourt prices from DESNZ, while electric vehicle rates are calculated using price data from DESNZ and ONS, consumption rates from DfT, and annual car sales volumes to businesses.
The advisory fuel rates will be updated again on September 1, before the final review this year on December 1. In 2026, changes will be made again on March 1 and June 1. As GB News reports, drivers can check the new rates to ensure they are being reimbursed correctly for business travel in their company cars.
For more information on the new HMRC fuel rates, you can visit the HMRC website. The new rates are as follows:
- Petrol:
- Engines up to 1,400cc: 12p per mile
- Between 1,401cc and 2,000cc: 14p per mile
- Over 2,000cc: 22p per mile
- Diesel:
- Engines up to 1,600cc: 11p per mile
- Between 1,601cc and 2,000cc: 13p per mile
- Over 2,000cc: 17p per mile
- Liquefied Petroleum Gas (LPG):
- Engines up to 1,400cc: 11p per mile
- Between 1,401cc and 2,000cc: 13p per mile
- Over 2,000cc: 21p per mile
- Electric:
- All electric vehicles: 7p per mile
Source: GB News
