HMRC Fuel Rates Rise to 17p Per Mile From June 1, 2026

HM Revenue and Customs has confirmed new advisory fuel rates effective June 1, 2026, with mid-sized company cars now charged at 17p per mile. The rates, which apply only to employees using company cars, increased from 13p and 14p respectively. HMRC reviews these rates quarterly to reflect fuel price changes and affects how businesses reimburse employees for business travel and private fuel use.

What Changed in the June Update

Petrol company cars with engines between 1401cc and 2000cc now face 17p per mile charges, up from 13p. Diesel cars in the same engine size range also increased to 17p per mile from 14p. Smaller vehicles saw more modest increases: petrol cars with engines of 1400cc or less now cost 14p per mile, while diesel cars with engines of 1600cc or less cost 15p per mile. Larger vehicles also increased, with 26p per mile for petrol engines over 2000cc and 23p per mile for diesel engines over 2000cc.

How HMRC Sets the Rates

HMRC reviews advisory fuel rates every quarter on March 1, June 1, September 1, and December 1. The rates are calculated using the latest petrol and diesel prices from the Department for Energy Security and Net Zero. HMRC calculates rates per mile to one decimal place, then rounds the final advisory fuel rates to the nearest whole penny. Rates ending in 0.5 are rounded down if the underlying figure is less than 0.5, and rounded up if greater than 0.5.

Who These Rates Apply To

The new rates apply only to employees using company cars for business travel or private fuel use. Employers use these rates to reimburse employees or determine if employees must repay the cost of fuel used for private travel. The rates do not apply to self-employed drivers or personal vehicle owners. Businesses must apply the correct rate based on their vehicle’s engine size and fuel type.

Final Thoughts

The 17p per mile rate for mid-sized company cars represents a significant increase from the previous quarter. Employers should update their reimbursement policies immediately to comply with the new rates effective June 1.

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