HMRC May Fuel Charge Changes: June 2026 Advisory Rate Hikes And Fleet Compliance Guide

HMRC advisory fuel rates are the pence-per-mile figures HM Revenue & Customs publishes quarterly for employers to reimburse employees for business travel in company-owned vehicles. The June 2026 update, effective from 1 June 2026, increases petrol, diesel, and LPG rates across all engine bands, while electric rates remain unchanged from March 2026.

Key Takeaways

• Petrol advisory rates over 2000cc rise to 26p per mile from 1 June 2026, up from 22p in March.
• Advisory fuel rates cover company cars only; AMAP rates, now 55p per mile, apply to employees using their own vehicles.
• Electric company cars use a dual rate: 7p per mile for home charging and 15p per mile for public charging.

What Are the Current HMRC Advisory Fuel Rates Changes for June 2026?

The June 2026 HMRC advisory fuel rates changes, effective from 1 June 2026 until 31 August 2026, mark the steepest quarterly increase across petrol, diesel, and LPG bands in four years. The diesel over-2000cc band recorded the steepest single-band rise, up 5p per mile on the March 2026 figures.

All figures are sourced from HMRC’s advisory fuel rates guidance published on GOV.UK on 22 May 2026.

Fuel Type	Engine Band	March 2026	June 2026	Change
Petrol	Up to 1400cc	12p	14p	+2p
Petrol	1401cc–2000cc	14p	17p	+3p
Petrol	Over 2000cc	22p	26p	+4p
Diesel	Up to 1600cc	12p	13p	+1p
Diesel	1601cc–2000cc	13p	15p	+2p
Diesel	Over 2000cc	18p	23p	+5p
LPG	Up to 1400cc	10p	11p	+1p
LPG	1401cc–2000cc	12p	14p	+2p
LPG	Over 2000cc	19p	21p	+2p
Electric	All	7p home / 15p public	7p home / 15p public	No change

The March 2026 predecessor petrol rates published by several sources at the time of the June announcement contained errors. The confirmed figures, verified against GOV.UK’s archived March 2026 guidance were 12p (up to 1400cc), 14p (1401cc–2000cc), and 22p (over 2000cc).

The diesel over-2000cc band’s 5p increase is the standout movement of this quarter, a direct result of the wholesale fuel cost pressures that drove this quarter’s rate cycle

Why Have the June 2026 Advisory Fuel Rates Increased So Sharply?

The June 2026 increases reflect Brent crude prices holding at approximately $100 per barrel. The Strait of Hormuz closure disrupted global oil supply chains in early 2026, sustaining wholesale fuel cost pressure across the full quarter.

HMRC’s baseline fuel prices for this update stood at 188.8p per litre for diesel and 156.8p per litre for unleaded. The last time HMRC applied comparable baseline figures was during the 2022–23 energy crisis.

UK pump prices had reached their highest level since early 2023 by the time HMRC confirmed the May 2026 update.

This marks the first upward change to petrol and diesel advisory fuel rates in four consecutive quarters. Fleet administrators should factor in a further upward correction for September 2026 if Brent crude holds above $100 per barrel.

How Does HMRC Calculate Advisory Fuel Rates?

HMRC calculates advisory fuel rates quarterly using fuel price data from the Department for Energy Security and Net Zero (DESNZ) and the Automobile Association (AA), combined with average fuel efficiency figures for company cars in each engine size band. The calculation follows four stages:

1. DESNZ supplies average market prices for petrol, diesel, LPG, and domestic electricity based on the preceding quarter’s data
2. The AA provides pump price benchmarks to validate and cross-reference DESNZ figures against actual UK forecourt data
3. HMRC applies average fuel efficiency ratings for company cars within each engine band, converting cost-per-litre into a pence-per-mile figure
4. Revised rates are published quarterly, on 1 March, 1 June, 1 September, and 1 December, with a one-calendar-month grace period before mandatory application

HMRC reviews rates quarterly specifically to keep fuel reimbursements aligned with real-world costs. The June 2026 quarter moved the diesel over-2000cc rate alone by 5p per mile, the scale of movement businesses must build into quarterly planning.

Advisory Fuel Rates vs AMAP: The Compliance Risk Employers Must Understand

Applying the wrong HMRC rate to the wrong vehicle type is consistently flagged during Employer Compliance Reviews, and is among the most common payroll errors recorded in mixed fleet arrangements.

Similar systemic mistakes often surface during routine audits, such as a misunderstanding of the tax code BR meaning when onboarding emergency or temporary drivers, leading to immediate emergency tax penalties. Advisory fuel rates govern business mileage reimbursement and the cost of private fuel in a company car.

In mixed fleet arrangements, this distinction breaks down more often than most payroll teams expect.

Advisory fuel rates cover fuel costs only and apply to company-owned vehicles. Approved Mileage Allowance Payments (AMAP) cover fuel, depreciation, and running costs for personal vehicle drivers.

Using AMAP rates for a company car creates a taxable benefit. The excess above the advisory rate attracts Class 1A National Insurance, payable by the employer.

The AMAP rate rose to 55p per mile for the first 10,000 business miles from 6 April 2026, its first upward revision since 2011.

With AMAP now at 55p per mile, the Class 1A National Insurance liability created by applying the wrong rate to a company car journey is greater than at any point since 2011.

Where a driver uses their own vehicle and is paid below the AMAP rate, Mileage Allowance Relief (MAR) can be claimed through self-assessment for the shortfall.

Employers running mixed fleets should maintain a documented rate policy specifying which rate applies to each driver category, not as a reactive measure, but as a standing fleet compliance practice.

What June 2026 Means for Electric Company Cars and the Gap in the Advisory Rate?

The Advisory Electricity Rate (AER) is unchanged from March 2026, 7p per mile for home charging, 15p per mile for public charging. The 15p public rate does not cover the real electricity cost for company car drivers using rapid DC infrastructure.

For employers running electric company cars, five practical factors determine whether the advisory rate covers actual charging costs:

• HMRC calculates the 15p public charging rate as an average across all public charge points. Slow AC units at workplaces and lamp posts (35–45p/kWh) pull that average well below rapid-charger costs.
• Long-distance fleet drivers using rapid DC chargers face electricity costs of approximately 22–23p per mile. Providers such as BP Pulse and Osprey motorway hubs typically charge 75–85p/kWh, well above HMRC’s average baseline.
• The shortfall is approximately 7–8p per mile, around £35–£40 unrecovered per 500-mile motorway journey, borne by the driver.
• HMRC permits reimbursement above the advisory rate where actual per-mile cost can be evidenced with charge point receipts.
• Where a company car charges at both home and public locations, mileage must be apportioned on a “fair and reasonable” basis, with the method documented for HMRC.

According to HMRC’s guidance on GOV.UK, the AER is calculated quarterly using electricity price data from DESNZ, public charging cost benchmarks from Zapmap, and price indices from the Office for National Statistics (ONS).

Advisory Fuel Rates for Hybrid and LPG Company Cars

Hybrid company cars follow the petrol or diesel advisory fuel rate, whichever fuel the vehicle primarily runs on, because HMRC does not publish a separate rate for hybrids. The Advisory Electricity Rate applies to fully electric vehicles only.

A plug-in hybrid (PHEV) uses the petrol advisory rate for any reimbursable journey driven on petrol. Drivers cannot apportion a single journey between the petrol and electric rate, the fuel physically consumed determines the applicable rate.

LPG rates rose in June 2026, the over-2000cc band increased from 19p to 21p per mile.

HMRC’s approach to hybrids is straightforward: advisory fuel rates cover the fuel physically consumed on a journey, not the vehicle’s theoretical dual-fuel capability.

The One-Month Grace Period: When Your Business Must Switch to the June 2026 Rates?

The previous March 2026 advisory fuel rates remain valid until 1 July 2026, not 30 June 2026 as some sources have stated.

Some sources state the grace period ends on 30 June 2026, this is incorrect. HMRC specifies one calendar month from the date new rates apply, which, from 1 June 2026, runs to 1 July 2026. The GOV.UK guidance published 22 May 2026 is the authoritative reference.

To complete the transition before 1 July 2026:

1. Update your expense management or payroll system with the June 2026 per-mile figures before processing any claims dated 1 July or later
2. Notify your company car drivers of the updated rate bands, engine size and fuel type to determine the applicable pence-per-mile figure
3. Verify that mileage records submitted after 1 July reflect June 2026 rates, claims still at March 2026 figures after that date require correction before HMRC submission
4. Check the current advisory fuel rate schedule directly through the Government Gateway to confirm the published rates your payroll system should reflect

Four quarterly rate changes each year create four separate windows for payroll errors, and HMRC does not treat post-grace-period rate discrepancies as administrative oversights.

Linking expense management systems directly to HMRC’s published advisory rates removes the manual update requirement from the quarterly compliance cycle.

VAT Reclaim on Fuel Expenses Reimbursed at Advisory Rates

VAT-registered employers can reclaim input VAT on the fuel element of advisory rate reimbursements, but only where valid VAT receipts and mileage records are maintained.

Smaller operations that sit comfortably below the standard VAT threshold 2025 registration level cannot reclaim input VAT on fuel expenses. VAT recovery on company car fuel reimbursements is available, subject to four conditions:

• Valid VAT fuel receipts must cover the specific dates on which business mileage was driven, undated or mismatched receipts will not support a fuel expense claim
• Mileage records must establish that each journey served a genuine business purpose. HMRC can disallow VAT recovery in full where records are inadequate
• VAT fuel scale charges apply if the vehicle is also used for private journeys without restriction, the company car fuel benefit charge may then arise
• The reclaimable VAT element is calculated on the fuel cost portion of the advisory rate only, not the full pence-per-mile reimbursement figure

Fuel VAT recovery adds up quickly across a fleet covering significant annual mileage, yet it is regularly overlooked by businesses that reimburse at advisory rates without submitting the underlying VAT receipts to HMRC.

Conclusion

The June 2026 HMRC advisory fuel rates changes mark the sharpest quarterly rise since the 2022–23 energy crisis, driven by Brent crude prices above $100 per barrel.

Employers must update payroll systems before 1 July 2026. For company car operators, the new rates deliver higher tax-free reimbursement ceilings through to September 2026.

FAQ

What is the difference between advisory fuel rates and AMAP?

Advisory fuel rates reimburse fuel costs in company-owned cars only. AMAP covers fuel, depreciation, and running costs for employees using personal vehicles. Applying one in place of the other is a payroll error and a specific trigger during HMRC Employer Compliance Reviews.

Can an employer pay more than the advisory fuel rate?

Yes. Employers can reimburse above the advisory rate where actual per-mile fuel costs are demonstrably higher. Without supporting evidence, the excess becomes a taxable benefit subject to Class 1A National Insurance.

Are advisory fuel rates mandatory?

No. HMRC advisory fuel rates changes establish a tax-free reimbursement ceiling, not a statutory floor. Employers may use alternative rates where actual costs or vehicle efficiency justify them, provided records are maintained.

Do advisory fuel rates apply to vans?

No, advisory fuel rates apply to company cars only. Van drivers are governed by separate HMRC rules covering approved amounts for business travel in light commercial vehicles.

Disclaimer: The information contained in this article is for general guidance and informational purposes only, and does not constitute formal tax, legal, or financial advice; businesses should consult a qualified professional or refer to official GOV.UK documentation before updating their payroll or expense policies.