HMRC has confirmed that three Advisory Fuel Rates (AFRs) for drivers will be cut from Tuesday, while one petrol rate increases. AFRs are recommended mileage reimbursement figures set by HMRC to cover fuel costs when employees travel on business in a company car.
They apply exclusively to company cars, not to employees driving their own personal vehicles. Employers use these rates to reimburse staff tax-free for fuel used during business trips. Where private repayment is concerned, employees use them to repay the company tax-free when using a company car for personal journeys. GOV.UK revises these rates four times a year — on 1 March, 1 June, 1 September and 1 December — to reflect fluctuating fuel prices.
Rate changes for diesel, petrol, LPG and EVs
Diesel rates for medium (1601cc–2000cc) and large (>2000cc) engines decrease by 1p per mile, reflecting lower average pump prices. Petrol rates for large engines (>2000cc) increase by 1p per mile, while smaller and mid-sized petrol engines remain unchanged. LPG rates for engines over 2000cc decrease by 1p per mile. Electric vehicle (EV) rates remain completely unchanged at 7p per mile for home charging and 15p per mile for public charging.
Petrol rates: up to 1400cc stays at 14p per mile; 1401cc to 2000cc stays at 17p per mile; over 2000cc rises from 26p to 27p per mile (+1p). Diesel rates: up to 1600cc stays at 15p per mile; 1601cc to 2000cc falls from 17p to 16p per mile (-1p); over 2000cc falls from 23p to 22p per mile (-1p). LPG rates: up to 1400cc stays at 11p per mile; 1401cc to 2000cc stays at 13p per mile; over 2000cc falls from 21p to 20p per mile (-1p). EV rates: home charging stays at 7p per mile; public charging stays at 15p per mile.
Key takeaways for employers and fleet managers
Employers can continue using the June 2026 rates for up to one month after the September rates take effect, until 30 September 2026. These rates apply strictly to company-owned vehicles. For personal vehicles used on business travel, the AMAP rate (55p per mile for the first 10,000 miles) applies instead. Hybrid cars do not have a separate rate; they continue to use the corresponding petrol or diesel engine size rate.
Some petrol stations are still failing to pass on reductions in wholesale prices swiftly enough, with more than a thousand warning letters dispatched to retailers neglecting to submit their prices to the Fuel Finder service, the UK's competition watchdog has revealed.
CMA concerns and impact on drivers
The Competition and Markets Authority (CMA) raised concerns in its latest quarterly update on the fuel market over "passive pricing strategies" employed by the majority of retailers, which it said were contributing to elevated profit margins amid mounting cost pressures on drivers stemming from the Iran war. The investigation revealed that certain retailers failed to promptly pass on reductions in wholesale diesel costs to motorists between May and June, which might have enhanced competition within the market.
The impact on oil prices from the conflict in the Middle East means filling a typical 55-litre family car with petrol costs about £89 compared with £74 a year ago. A tank of diesel is approximately £100, up from £79 in August 2025.
An RAC survey of nearly 3,000 UK drivers indicated that 13% have scrapped their bank holiday travel plans because of higher pump prices. Some 8% said they would still make their journey but save money on other things such as accommodation and eating out.
