New HMRC Advisory Fuel Rates for September 2025: What Employers and Employees Need to Know
Navigating company car expenses is easier when employers and employees understand how HMRC’s advisory fuel rates (AFRs) work. They’re updated every quarter with most recent update having been on 1 September 2025. These rates reflect the average UK fuel and charging costs by providing a simple framework for reimbursing business travel expenses.
What are advisory fuel rates?
These fuel rates are set by HMRC and allow employers to reimburse workers for relevant mileage done in company cars. It also enables workers to repay their employer for any fuel used in a personal capacity without triggering a tax charge and avoid any National Insurance implications.
Current advisory rates effective September 2025
The latest HMRC rates apply from 1 September 2025 (Older rates can still be used until 30 September 2025).
Advisory fuel rates for petrol & LPG cars:
| Engine size | Petrol rate per mile | LPG rate per mile |
|---|---|---|
| 1400cc or less | 12p | 11p |
| 1401cc–2000cc | 14p | 13p |
| Over 2000cc | 22p | 21p |
Advisory fuel rates for diesel cars:
| Engine size | Diesel rate per mile |
|---|---|
| 1600cc or less | 12p |
| 1601cc to 2000cc | 13p |
| Over 2000cc | 18p |
Advisory fuel rates for electric cars:
| Station | Electric rate per mile |
|---|---|
| Home Charging | 8p per mile |
| Public Charging | 14p per mile (newly introduced this quarter) |
Quarterly Updates & Compliance
HMRC reviews fuel rates four times a year (March, June, September, and December) to match fluctuating prices, ensuring that payments done for business travel accurately reflect what they cost in the real-world. These rules help teams stay compliant, keeping company car schemes straightforward and tax efficient.
Why the new electric rates matter
Electric cars are becoming increasingly popular, and this has been recognised by the HMRC. This is why they now offer separate rates for home and public charging. This amendment can help finance teams calculate fairer reimbursements as the cost of public charging has risen.
Mileage Allowance Payments for vehicles owned by Employees
The above advisory rates relate solely to company cars. Mileage allowance payments are also permitted to be made to employees for business mileage in their own car. These rates paid reflect an element of wear and tear on the car as well as payment for the fuel (wear and tear excess element subject to a maximum of 10,000 miles per annum). A tax-free payment can also be made where there are passengers. These rates are unchanged from 1 September 2025:
| Type of vehicle | Rate |
|---|---|
| Car or van | 45p per mile for the first 10,000 miles, 25p per mile after |
| Motorcycle | 24p per mile |
| Cycle | 20p per mile |
Passenger payments
| Type of vehicle | Rate |
|---|---|
| Car or van only, per passenger | 5p per mile |
How Moore South can help:
If handling company car policies, mileage claims, or understanding HMRC’s fuel rates feels complex, Moore South’s experienced tax consultants can simplify everything for your business. From company car schemes to payroll compliance, Moore South offers expert support for businesses and individuals. Learn more about our tax advisory and payroll services.
Contact our team for tailored help before your next payroll run or car scheme review. Make tax simple this September by partnering with Moore South.