What are fuel and electric advisory rates?
Advisory Fuel Rates (AFR) or Advisory Electric Rates (AER) are set by the Government and should only be used for employees who drive a company car. These rates can be used by businesses when you need to reimburse employees for business travel in their company cars or when your employees need to repay the cost of fuel used for private travel in their company car.
HMRC updates advisory fuel rates affecting petrol, diesel and electric vehicles every 1 March, 1 June, 1 September and 1 December.
These quarterly reviews are reflected by changes in fuel prices and vehicle efficiency standards to make sure that the rates remain relevant and fair
Reimbursing your employees for company car business travel
There’s no taxable profit or Class 1A National Insurance to pay if you stick to or below the advisory fuel and electric rates for the engine size and fuel type of the company car.
However, if you reimburse more than the AFR/AER, but are unable to document a higher fuel cost per mile, you’ll need to treat any excess as taxable profit and earnings, for which Class 1 National Insurance will be payable.
If the cost of business travel is higher than the guideline rates or if your company cars offer better fuel efficiency, you can determine your own rates accordingly.
Learn more about company car tax in our blog: The Tax Implications of a Company Car.
Employees to repay the cost of fuel used for private travel
Use the correct HMRC advisory fuel rate or higher to calculate how much your employees must repay the business for fuel used for private travel. Fuel benefit charges apply when an employee’s private fuel is paid for by the business, so it is important to ensure private mileage is recorded and reimbursed accurately to prevent a charge from arising.
If you can show that the full cost of private fuel is covered by employees repaying at a lower mileage rate, then AFRs are not required.
Employee financial well-being is important for retention. Find out how you can offer low-cost motoring in our blog: Support Financial Wellbeing Through Employee Benefits.
How mileage rates for a company car are calculated
HMRC reviews fuel and electric advisory rates quarterly and considers MPG figures and fuel prices. The new rates as of 1 September 2025 are below.
Petrol & LPG
Engine Size (cc) Petrol AFR LPG AFR
Up to 1400 12 pence 11 pence
1401 to 2000 14 pence 13 pence
Over 2000 22 pence 21 pence
Diesel
Engine Size (cc) AFR
Up to 1600 12 pence
1601 to 2000 13 pence
Over 2000 18 pence
Electric Vehicles
From 1 September 2025 the advisory electric rates for fully electric cars will be:
- 8 pence per mile for home charging
- 14 pence per mile for public charging
Hybrid cars are treated as either petrol or diesel cars for AFR. Refer to the above tables for these rates.
The advisory electric rate for fully electric cars is calculated using electrical price data from:
- Department Energy Security and Net Zero
- Office for National Statistics (ONS)
- Car electrical consumption rates from the Department for Transport (DfT)
- Annual car sales volumes to businesses (Fleet Audits average for the last three years)
The public charging advisory electric rate for fully electric cars is calculated using additional public charging price data from the Zapmap Price Index.
Stay updated with the latest company car updates
At CBS, we keep our customers informed on the latest financial and automotive industry changes, such as company car tax changes and rates.
Find the latest tax changes in our blog: Tax Changes from April 2025 or contact us today for fleet management advice and company car fleet solutions.
Data source: www.gov.uk/guidance/advisory-fuel-rates