HMRC advisory fuel rates for company car users from 1 June 2025

Sara White, Editor, Business & Accountancy Daily

Advisory fuel rates for company car users have been cut for some petrol and diesel vehicles, electric rates unchanged.

The advisory fuel rates that apply from 1 June 2025 have been adjusted for petrol vehicles of 1401cc and over with a 1p cut, while diesel engines up to 1600cc are also cut 1p per mile, back to the pre-March rate, with other engine sizes unchanged. The electric mileage rate remains unchanged. 

The previous rates, effective from March 2025, can be used for up to one month from the date the new rates apply.

The rates only apply in the following circumstances:

• reimburse employees for business travel in their company cars; or

• require employees to repay the cost of fuel used for private travel.

  
  

These rates cannot be used in any other circumstances. If the rates are used, it is not necessary to apply for a dispensation to cover the payments made.

From 1 June 2025 the advisory electricity rate for fully electric cars remains unchanged at 7p. In line with advisory fuel rates, this electric rate is now being reviewed quarterly and has been included in the tables below.

Advisory fuel rates from 1 June 2025

Petrol/LPG

Engine size	Petrol - amount per mile (previous)	LPG - amount per mile (previous)
1400cc or less	12p (12p)	11p (11p)
1401cc to 2000cc	14p (15p)	13p (13p)
Over 2000cc	22p (23p)	21p (21p)

Diesel

Engine size	Diesel - amount per mile (previous)
Up to 1600cc	11p (12p)
1601cc to 2000cc	13p (13p)
Over 2000cc	17p (17p)

Hybrid cars are treated as either petrol or diesel cars for this purpose.

The latest HMRC guidance states: ‘If the mileage rate you pay is no higher than the advisory fuel rates for the engine size and fuel type of the company car, there will be no taxable profit and no Class 1A National Insurance to pay.

‘If your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates, you can use your own rates to reflect your situation.

‘If you pay rates that are higher than the advisory rates but cannot show that the fuel cost per mile is higher, there will be no fuel benefit charge if the mileage payments are only for business travel. Instead, you’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes’.

HMRC reviews rates quarterly on 1 March, 1 June, 1 September and 1 December.