Two separate updates landed for UK businesses this year, and mixing them up is an easy way to overpay. Company car mileage rates rose on 1 June 2026.
HMRC’s new road fuel rates for petrol now reach 26p per mile, while VAT road fuel scale charges changed on 1 May 2026. There are different rules with different deadlines.
- Petrol: 14p, 17p and 26p per mile, depending on engine size.
- Diesel: 15p, 17p and 23p per mile.
- LPG: 11p, 13p and 21p per mile.
- Electric cars: 7p per mile at home, 15p per mile on public chargers.
- Advisory rates apply to company cars only, never to personal vehicles.
- VAT road fuel scale charges run from 1 May 2026 to 30 April 2027.
What Actually Changed
Advisory fuel rates are reviewed four times a year, on 1 March, 1 June, 1 September and 1 December. June’s rise was the first real movement in about a year. Reporting from I News linked the wider picture to pressure on fuel duty as Gulf tensions pushed oil prices up.
The VAT side runs on a different clock. Scale charges are set annually, and businesses must use the new scales from the start of their next prescribed accounting period beginning on or after 1 May 2026.
HMRC New Road Fuel Rates for Company Cars
These rates took effect on 1 June 2026.
Petrol and LPG
| Engine Size | Petrol | LPG |
| 1400cc or less | 14p | 11p |
| 1401cc to 2000cc | 17p | 13p |
| Over 2000cc | 26p | 21p |
Diesel
| Engine Size | Rate per mile |
| 1600cc or less | 15p |
| 1601cc to 2000cc | 17p |
| Over 2000cc | 23p |
Electric
| Charging location | Rate per mile |
| Home charger | 7p |
| Public charger | 15p |
Hybrid cars are treated as petrol or diesel, based on the fuel they run on.
When You Can Use Them
The rules are narrow. You may use these rates to reimburse staff for business travel in a company car or to charge staff for fuel used privately. You must not use them in any other circumstances.
Pay at or below the published rate and there is no taxable profit and no Class 1A National Insurance to pay. Pay more without evidence of a higher cost per mile, and the excess becomes taxable earnings.
Employees driving their own cars fall outside this system entirely. Approved mileage allowance payments apply instead, currently 55p per mile for the first 10,000 business miles. Confusing the two is a common trigger for P11D corrections.
Also read: Why Is HMRC Investigating 14,000 UK Families Over Inheritance Tax in 2026?
How the Figures are Worked Out
Petrol and diesel prices come from the Department for Energy Security and Net Zero, with LPG pricing from the AA. Miles per gallon figures come from manufacturers’ data, weighted by three years of fleet sales. LPG mileage is set 20% below petrol because of its lower energy density.
For electric cars, HMRC used an efficiency figure of 3.59 miles per kilowatt-hour. Home electricity was priced at 26.90p per kWh and slow or fast public charging at 54.00p, using the Zapmap Price Index and Office for National Statistics data. That gives 7.48p and 15.02p per mile before rounding.
VAT Road Fuel Scale Charges to 30 April 2027
Reclaim VAT in full on fuel and you pay a flat charge for private use. GOV.UK publishes the full valuation table in 5g bands. Here are the anchor points:
| CO₂ emissions | 12 months | 3 months | 1 month |
| 120 or less | £657.00 | £163.00 | £54.00 |
| 140 | £1,182.00 | £294.00 | £98.00 |
| 175 | £1,640.00 | £409.00 | £136.00 |
| 200 | £1,971.00 | £492.00 | £163.00 |
| 225 or more | £2,297.00 | £574.00 | £190.00 |
Each figure is VAT inclusive and covers one person and one vehicle for the period.
Finding Your CO₂ Band
Check your V5C logbook first. If the figure is not a multiple of five, round it down. If a UK approval certificate lists several figures, use the combined figure. Where different fuels are listed, select the lowest one.
Older cars without a CO₂ figure use engine size instead. Up to 1,400cc is classified in band 140. Between 1,400cc and 2,000cc, it uses band 175. Above 2,000cc, it uses band 225 or more.
Also read: Will the New State Pension Be Taxed From April 2027?
Your Three Choices on VAT
You can recover no VAT at all. You can keep detailed mileage records and reclaim only the business share. Or you can reclaim in full and pay the scale charge.
White Oak UK points out that the charges do not apply to electric cars and that a genuine pool car meeting HMRC’s strict definition falls outside them too. Low private mileage often makes record-keeping cheaper than the flat rate.
Scale Charges Versus Fuel Benefit Charges
These are not the same thing. A fuel scale charge is a VAT matter for the business. A fuel benefit charge is an income tax and National Insurance matter, triggered when an employer funds private fuel in a company car.
Fleet fuel card provider The Fuel Store notes that card spend sits with the business, so the advisory rate only matters when working out what a driver owes back for private journeys.
FAQs
Q. When do the next advisory fuel rates apply?
A. The next review takes effect on 1 September 2026. HMRC updates the rates every quarter, in March, June, September and December.
Q. Are advisory fuel rates compulsory?
A. No, they are advisory. You may pay a different rate if you can evidence a higher or lower actual cost per mile.
Q. Can I still use the March 2026 rates?
A. Only for one month after a change. The March rates could be used until 1 July 2026, then the new figures apply.
Q. Do fuel-scale charges apply to electric cars?
A. No, road fuel scale charges cover petrol and diesel private use only. Electric vehicles sit outside the scheme.
Q. What rate applies if staff use their own car?
A. Approved mileage allowance payments apply, not advisory fuel rates. The two schemes are separate and pay very different amounts.
Q. How do I handle mixed home and public EV charging?
A. Split the mileage between the 7p and 15p rates. HMRC accepts any apportionment that is fair and reasonable.
Sources & References:
- GOV.UK – The government has officially published the VAT road fuel scale charges.
- The Fuel Store – The advisory rate only matters when working out what a driver owes back for private journeys
- I News – There is pressure on fuel duty as Gulf tensions push oil prices up.
- White Oak UK – These charges do not apply to electric cars.
