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

HM Revenue and Customs (HMRC) has confirmed new advisory fuel rates for company car drivers effective June 1, 2026. Petrol and diesel drivers in mid-sized vehicles now face 17p per mile charges, up from 13p and 14p respectively. The rates apply to the three-month period until September 1 and affect how employees are reimbursed for business mileage or repay private fuel costs.

Petrol and Diesel Rates Jump Sharply

Drivers of petrol company cars with engines between 1401cc and 2000cc now pay 17p per mile, up from 13p. Diesel drivers in the same engine range face 17p per mile, up from 14p. Smaller petrol vehicles with engines of 1400cc or less now cost 14p per mile, while diesel cars with engines of 1600cc or less are 15p per mile. Larger vehicles saw bigger increases, with petrol cars over 2000cc rising to 26p per mile and diesel vehicles over 2000cc climbing to 23p per mile.

Electric Rates Remain Stable

Electric company car drivers saw no change in advisory rates for this quarter. Home charger users remain at 7p per mile, while public charger users stay at 15p per mile. HMRC conducts quarterly reviews on March 1, June 1, September 1, and December 1 each year. The rates are based on fuel prices from the Department for Energy Security and Net Zero (DESNZ).

Why Rates Increased This Quarter

Average petrol prices reached their highest level in three and a half years between March and June 2026. Wholesale petrol costs in May surged more than 5p above the previous high set during the Iran oil crisis. HMRC uses these price movements to set advisory rates, which employers and employees use to calculate fair reimbursement for business mileage or private fuel use in company vehicles.

How Advisory Rates Work

Advisory fuel rates apply only to company car drivers and serve two purposes. Employers use them to reimburse employees for business travel, and employees use them to repay the cost of fuel used for private travel. The rates are rounded to one decimal place and take effect quarterly. Drivers should check how company car tax works to understand the full tax implications of using a company vehicle.

Final Thoughts

Company car drivers face higher fuel reimbursement costs from June 1, with petrol and diesel rates up to 17p per mile. Electric vehicle rates remain unchanged, making EVs a more stable option for business mileage in the short term.

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