If your organisation provides vehicles to staff or volunteers, knowing the correct company car mileage rates matters for accurate reimbursement, clean payroll records and a straightforward relationship with HMRC.
The company car mileage rates changed on 1 June 2026, with most figures rising to reflect higher pump prices, so any policy or expense system still running on older numbers needs updating.
This guide sets out the current HMRC advisory fuel rates for company cars, explains how they differ from the rates that apply to a personal vehicle, and shows what all of this means in practice for community transport operators and the volunteer drivers they rely on.
Key takeaways
- HMRC company car mileage rates are officially called Advisory Fuel Rates (AFRs). They apply only to company cars, not to a vehicle an employee owns.
- The current rates took effect on 1 June 2026 and run until the next quarterly review on 1 September 2026.
- Petrol AFRs are 14p, 17p and 26p per mile depending on engine size. Diesel is 15p, 17p and 23p. LPG is 11p, 13p and 21p.
- Fully electric company cars use the Advisory Electricity Rate: 7p per mile for home charging and 15p per mile for public charging.
- When a driver uses their own car instead, the separate AMAP rate of 55p per mile for the first 10,000 business miles applies, not the AFR. Confusing the two is one of the most common findings in an HMRC compliance check.
What are company car mileage rates?
When people search for company car mileage rates, they are almost always looking for HMRC Advisory Fuel Rates, usually shortened to AFRs. These are the recommended pence per mile figures that employers use to reimburse an employee for fuel used on business journeys in a company car, or to work out how much an employee should repay when they have used the company car for private travel. HMRC sets the rates by engine size and fuel type, and reviews them four times a year.
The important point to hold onto from the start is that advisory fuel rates apply to company cars only. If a member of staff or a volunteer driver uses their own vehicle for work, a completely different set of figures applies. We cover that distinction in detail below, because getting it wrong is one of the most frequent issues HMRC flags during an employer compliance review.
Current HMRC company car mileage rates (from 1 June 2026)
The rates below took effect on 1 June 2026 and apply until the next review on 1 September 2026. They are published in full in the HMRC advisory fuel rates guidance on GOV.UK. Most petrol, diesel and LPG rates rose this quarter, driven by higher fuel prices at the pump.
Petrol advisory fuel rates
| Engine size | Rate per mile from 1 June 2026 |
|---|---|
| 1400cc or less | 14p |
| 1401cc to 2000cc | 17p |
| Over 2000cc | 26p |
Diesel advisory fuel rates
| Engine size | Rate per mile from 1 June 2026 |
|---|---|
| 1600cc or less | 15p |
| 1601cc to 2000cc | 17p |
| Over 2000cc | 23p |
LPG advisory fuel rates
| Engine size | Rate per mile from 1 June 2026 |
|---|---|
| 1400cc or less | 11p |
| 1401cc to 2000cc | 13p |
| Over 2000cc | 21p |
Electric company cars: the advisory electricity rate
Fully electric company cars use a separate figure known as the Advisory Electricity Rate (AER). HMRC now splits this into two, recognising that charging at home is far cheaper than relying on the public network. Both figures are unchanged from the previous quarter.
| Charging location | Rate per mile from 1 June 2026 |
|---|---|
| Home charging | 7p |
| Public charging | 15p |
Where a company car is charged at both home and public points, the mileage can be apportioned between the two rates on a basis that HMRC describes as fair and reasonable.
When do the rates change?
HMRC reviews advisory fuel rates every quarter, on 1 March, 1 June, 1 September and 1 December. The figures are based on recent fuel and electricity prices alongside average fuel efficiency data, so they tend to lag slightly behind what is actually happening at the forecourt. The June 2026 update pushed most rates upward after petrol and diesel prices climbed to their highest level in several years.
There is a helpful grace period. When new rates take effect, you can carry on using the previous quarter's figures for up to one month. Even so, the cleanest approach is to update your expense policy and any payroll or expense software promptly, then run a test claim to confirm the correct rate pulls through before the next real submission. The next scheduled review is 1 September 2026.
Company car mileage rates vs AMAP: what is the difference?
This is the single most important distinction to understand, and it is where a great deal of confusion arises. Advisory fuel rates apply to a company car. When someone drives their own vehicle for work instead, the rate that applies is the Approved Mileage Allowance Payment, or AMAP.
AMAP rates changed for the 2026/27 tax year. On 21 May 2026 the government announced that the rate for cars and vans would rise from 45p to 55p per mile for the first 10,000 business miles, backdated to 6 April 2026. As the ICAEW notes, this was the first increase in 15 years. The House of Commons Library briefing confirms that the rate above 10,000 miles, and the rates for motorcycles and bicycles, were left unchanged.
The contrast between the two schemes is stark. AMAP is worth far more per mile because it is designed to cover the full cost of running a personal vehicle, not just fuel.
| Advisory Fuel Rates (AFR) | Approved Mileage Allowance Payments (AMAP) | |
|---|---|---|
| Applies to | Company cars provided by the employer | An employee or volunteer's own vehicle |
| What it covers | Fuel or electricity only | Fuel plus tax, insurance, servicing, depreciation and wear |
| Cars and vans rate | 14p to 26p by engine size and fuel type | 55p for the first 10,000 miles, then 25p |
| Reviewed | Quarterly by HMRC | Set per tax year |
| Main purpose | Reimburse business fuel, or recover private fuel used in the company car | Reimburse the cost of business travel in a personal vehicle |
A quick reference table for both schemes is maintained on the GOV.UK travel, mileage and fuel allowances page. If your organisation reimburses both company car fuel and personal vehicle mileage, keep the two categories clearly separated in your expense system, because updating one does not automatically update the other.
How are company car mileage rates used?
Advisory fuel rates have three main uses in day to day practice.
- Reimbursing business fuel. When an employee pays for fuel used on a business journey in a company car, you can reimburse them at the relevant AFR. As long as you pay no more than the published rate for that engine size and fuel type, there is no taxable profit and no Class 1A National Insurance to account for.
- Recovering private fuel. Where the organisation pays for all fuel, including private mileage, the driver can repay the private element at the AFR. Doing so removes the fuel benefit charge that would otherwise apply for that private travel.
- Reclaiming VAT. VAT registered businesses can use the fuel element of an AFR based mileage payment to reclaim input VAT on business fuel, provided you hold VAT receipts to cover the amount claimed.
Because the rates are advisory rather than mandatory, they exist to give employers a simple, HMRC approved shortcut that avoids working out actual fuel cost for every single journey. For most organisations, applying the AFR is far less work than reconciling individual fuel receipts.
What about electric and hybrid company cars?
Fully electric company cars use the Advisory Electricity Rate covered above: 7p per mile for home charging and 15p per mile for public charging. If your actual cost per mile is higher, for example because a driver relies on more expensive rapid public chargers, a higher rate can be used as long as you can evidence the real cost.
Hybrids are more straightforward than many people expect. There is no separate hybrid rate. For advisory fuel rate purposes, a hybrid is treated as either a petrol or a diesel car, depending on the engine it runs on, so you simply use the relevant petrol or diesel table by engine size.
One further point often trips people up. A personally owned electric car used for business does not use the 7p or 15p electricity rate. It falls under AMAP, so the same 55p and 25p figures apply as for a petrol or diesel car. The electricity rate is for company cars only.
Can employers pay more or less than the advisory rate?
Yes to both, with conditions. You can pay less than the advisory rate if you prefer, and you can pay more where you can genuinely demonstrate that the cost of business travel is higher, or that your cars are less fuel efficient than the guideline assumes. The key is evidence.
If you pay above the advisory rate without evidence to justify it, the excess is treated as taxable earnings. That means additional reporting, income tax and potentially National Insurance. For most organisations, staying at or below the published AFR is the simplest way to keep reimbursements tax free and admin light.
What records do you need to keep?
Whether you are applying advisory fuel rates for company cars or AMAP for personal vehicles, the same record keeping discipline protects you. HMRC can ask to see mileage logs going back several years, and clear records are your best defence in a compliance review.
Each journey entry should capture the date, the start and end point, the business purpose and the distance. Two habits are worth building in. First, keep business and private mileage clearly distinguished, since only business travel qualifies and ordinary commuting between home and a regular workplace does not. Second, track cumulative business mileage across the tax year, because the AMAP threshold that drops the rate from 55p to 25p applies at 10,000 miles across the whole year, not per trip or per month.
Why accurate mileage matters for community transport
Community transport organisations sit right at the intersection of these two schemes. A single operator might run its own pool cars and minibuses, which are company vehicles subject to advisory fuel rates, while at the same time coordinating a voluntary car scheme where volunteers use their own vehicles and are reimbursed under AMAP. Getting the right rate against the right journey is not a technicality here. It affects volunteer goodwill, charity funds and the accuracy of the figures you report.
The stakes are practical. Reimburse a volunteer driver at a company car fuel rate by mistake and you underpay them significantly, which quietly erodes the volunteer base a scheme depends on. Reimburse above the approved amount without records and you create a taxable benefit and an avoidable headache. Multiply either error across hundreds of journeys a month and the impact compounds quickly.
This is where good journey and mileage recording earns its keep. Road XS captures each trip as it is booked and completed, with the pick up and drop off, the distance and the driver attached, so mileage totals build automatically rather than relying on paper logs reconciled at month end. That gives coordinators a clean, defensible record for reimbursing volunteer drivers at the correct approved mileage rate, and a clear audit trail if HMRC or a funder ever asks how the figures were reached. When the rates change, as they did in 2026, you update one reference point rather than chasing every place a rate is stored.
Frequently asked questions
What is the mileage rate for company cars?
From 1 June 2026, petrol company cars are reimbursed at 14p, 17p or 26p per mile depending on engine size, diesel at 15p, 17p or 23p, and LPG at 11p, 13p or 21p. Fully electric company cars use 7p per mile for home charging and 15p for public charging. These are HMRC advisory fuel rates and apply until the next review on 1 September 2026.
How are government company car mileage rates calculated?
HMRC works the rates out from average fuel and electricity prices combined with average fuel efficiency figures for company cars. Petrol and diesel prices come from the Department for Energy Security and Net Zero, LPG from the AA, and the electricity figures draw on published domestic and public charging price data. The rates are reviewed every quarter to keep them broadly in line with real costs.
Can you claim mileage on a company car?
Yes, but only for the fuel used on business journeys, and only at the advisory fuel rate for that car. You cannot claim the full 55p AMAP rate on a company car, because AMAP is reserved for a vehicle you own yourself. If the company pays for all your fuel, the AFR is also used to work out how much private fuel you should repay.
Do company car mileage rates apply to electric cars?
A fully electric company car uses the Advisory Electricity Rate of 7p per mile for home charging and 15p for public charging, rather than the petrol, diesel or LPG figures. A personally owned electric car used for business is different again, and falls under the standard AMAP rates of 55p and 25p.
Are company car mileage rates the same as the 55p AMAP rate?
No. The 55p rate is the AMAP rate for the first 10,000 business miles in a personal vehicle. Company car mileage rates are the much lower advisory fuel rates, because they only need to cover fuel rather than the full running cost of a car. Applying the wrong one is a common error in HMRC employer compliance reviews.
Reimburse mileage accurately with Road XS
Whether you run pool vehicles or a voluntary car scheme, keeping company car mileage rates and volunteer mileage straight comes down to reliable journey records. Road XS logs every trip automatically, builds accurate mileage totals for each driver, and gives coordinators a clean audit trail for reimbursement at the correct HMRC rate. When rates change, your records stay consistent and easy to reconcile.
This article is for general information and reflects HMRC rates in force from 1 June 2026. It is not tax advice. Always check the current GOV.UK guidance or speak to a qualified adviser before making decisions.
