HMRC’s quarterly update of Advisory Fuel Rates (AFRs) for company cars came into effect on 1 June 2025, bringing minor but important changes for employers reimbursing staff for business mileage.
These rates apply when a company car is used for business travel and ensure employees are reimbursed tax-free for fuel costs, provided employers follow HMRC’s set guidance.
New Advisory Fuel Rates (from 1 June 2025)
Petrol Vehicles
| Engine Size | New Rate | Change from March 2025 |
| 1400cc or less | 12p | No change |
| 1401cc to 2000cc | 14p | ↓ 1p |
| Over 2000cc | 22p | ↓ 1p |
Diesel Vehicles
| Engine Size | New Rate | Change from March 2025 |
| 1600cc or less | 11p | ↓ 1p |
| 1601cc to 2000cc | 13p | No change |
| Over 2000cc | 17p | No change |
LPG Vehicles
| Engine Size | New Rate | Change from March 2025 |
| 1400cc or less | 11p | No change |
| 1401cc to 2000cc | 13p | No change |
| Over 2000cc | 21p | No change |
Fully Electric Vehicles
- 7p per mile — unchanged.
What These Rates Cover
AFRs apply to fuel-only reimbursements for company vehicles. They do not include other running costs such as insurance or depreciation — those remain the employer’s responsibility.
Employers can:
- Reimburse staff up to these rates tax-free.
- Use lower rates, though employees may then claim mileage relief.
- Use the previous rates until 30 June 2025 to allow for administrative transition.
Key Changes Summary
- Petrol rates for mid- and large-engine cars dropped by 1p per mile.
- Diesel rates for smaller engines also saw a 1p cut.
- Rates for electric vehicles and LPG remain unchanged.
- These adjustments reflect fluctuating fuel prices and updated consumption data.