Accountant For Self Employed

Self employed advisory fuel rates guide

HMRC advisory fuel rates are the mileage rates companies use to reimburse employees for business fuel in a company car, or to recover the cost of private fuel from them. Rates are set per engine size for petrol, diesel, LPG, and electric vehicles, and updated quarterly on 1 March, 1 June, 1 September and 1 December. Using the published rate avoids a taxable benefit.

By Jordan Macey MAAT Reviewed by Noor Fiaz Updated 16 Apr 2026 2

Key takeaways

HMRC advisory fuel rates cover company car fuel reimbursement and repayment; they do not apply to sole traders, who claim the flat 45p and 25p mileage rates instead.
Rates are reviewed quarterly and take effect from 1 March, 1 June, 1 September and 1 December each year, with old rates usable for up to one further month.
Separate rates apply for petrol, diesel, LPG and fully electric company cars, grouped by engine size; hybrids use the equivalent petrol or diesel rate.
Paying at or below the advisory rate means no taxable benefit arises on business fuel reimbursement, and no employee National Insurance is due.
VAT can be reclaimed on the fuel element of business mileage at the advisory rate, provided the business holds VAT receipts covering the cost.

What are advisory fuel rates?

Advisory fuel rates are recommended repayment amounts a company can use when reclaiming the fuel element on business mileage.

The rates are used to calculate:

How much employers should reimburse employees for business travel using the company car
How much employees need to repay employers for private travel using the company car
The VAT you can claim back on business mileage using your personal vehicle

What are the advisory fuel rates?

Additional points to note:

The rates indicated in the final column are for fully electric cars. For hybrid cars, refer to the petrol or diesel rate. Electricity is not considered to be a fuel for car fuel benefit purposes.
These rates should not be used for vans.
These rates apply from 1st June 2019. The previous rates can be used for up to one month starting from the date that the new rates apply.
The rates are updated every quarter (March, June, September and December). The latest rates can be viewed on the HMRC website, and you can also refer to previous rates here.
Record keeping requirements: You'll need to keep fuel receipts for your VAT records. Simplify your record keeping processes by using apps with receipt scanning and storing features, such as Shoeboxed or Expensify.

Advisory Fuel Rates Calculation

Here's an example:

Henry is an employee driving a petrol car with 1,600cc capacity. This is a company car, and it has been used for 10,000 business miles.

The cost of fuel is: 10,000 x 15p = £1,500 (inc VAT at 20%)

The VAT portion of the cost is: £1,500/ 120 = 12.5

12.5 x 20 = £250

Using this example, £250 of VAT can be claimed on HMRC on the employer's VAT return.

Frequently asked questions

What are HMRC advisory fuel rates used for?

Advisory fuel rates are set by HMRC for companies to reimburse employees for business mileage in a company car, or to recover the cost of private fuel paid for by the employer. Paying at the advisory rate means no taxable benefit and no National Insurance charge arises. Businesses can also use the advisory rate to reclaim VAT on the fuel element of business journeys, provided they keep VAT receipts for the fuel purchased.

How often do advisory fuel rates change?

HMRC reviews advisory fuel rates every three months, with new rates taking effect on 1 March, 1 June, 1 September and 1 December. Employers can continue to use the previous rates for up to one month after new ones are published, giving time to update payroll and expense systems. Where pump prices shift sharply between reviews, HMRC may publish an out-of-cycle update, so the rates table should be checked each quarter.

Do advisory fuel rates apply to self-employed sole traders?

No. Advisory fuel rates apply only when an employer reimburses an employee for business fuel in a company car. Self-employed sole traders claim the HMRC simplified mileage rate of 45 pence per mile for the first 10,000 business miles in a tax year and 25 pence per mile after that, covering fuel, insurance, servicing and depreciation in a single figure. They cannot use advisory fuel rates.

What is the advisory electricity rate for electric company cars?

HMRC publishes a separate advisory electricity rate for fully electric company cars, reviewed alongside petrol and diesel rates each quarter. The current rate can be found on the advisory fuel rates page on gov.uk. Electricity is not classed as fuel for car fuel benefit purposes, so different rules apply to VAT recovery on workplace charging. Hybrid cars continue to use the relevant petrol or diesel rate rather than the electricity rate.

Can I pay employees more than the advisory fuel rate?

You can pay a higher rate if the employee can demonstrate that the actual cost of fuel per mile exceeds the published advisory figure, for example in a less efficient car or where fuel prices are unusually high. Without evidence, any excess over the advisory rate is treated as taxable income and must be reported through payroll. Keeping fuel receipts and mileage logs is essential to defend any higher reimbursement.

Do advisory fuel rates apply to vans?

No. Advisory fuel rates apply only to company cars. Vans provided for business use have a separate treatment under the van benefit charge rules, and van fuel reimbursements are handled differently. Where an employee uses a company van for business mileage, HMRC looks at whether the van is available for private use and whether the employer pays for any private fuel. Van-specific rules are set out in HMRC guidance 480.