HMRC’s advisory fuel rates for company cars change today, 1 September 2026. The update is not a press release for fleet managers. It is a live payroll and benefit-control event: wrong rates create taxable profit, Class 1 NIC on excess reimbursements, or — worse — an avoidable company car fuel benefit charged at the £29,200 multiplier times the car’s appropriate percentage.
Primary sources: HMRC’s advisory fuel rates guidance, the employer rates and thresholds for 2026 to 2027, expenses and benefits business travel rules, EIM fuel benefit chapters, Class 1A NIC at 15% for 2026/27, and HMRC’s mandatory payrolling of benefits in kind programme flagged again in Agent Update Issue 146.
If your group still runs company cars, hybrid fleets or EV pool cars with private-use fuel, treat this week as a cutover week — not a “note for Q3” item.
What actually changes from 1 September 2026
HMRC reviews advisory fuel rates quarterly — 1 March, 1 June, 1 September and 1 December — using DESNZ fuel prices, AA LPG data, fleet sales-weighted MPG and, for pure electrics, DESNZ/ONS electricity prices plus Zapmap public-charging data.
From 1 September 2026:
Petrol
- 1400cc or less: 14p
- 1401cc to 2000cc: 17p
- Over 2000cc: 27p (was 26p)
LPG
- 1400cc or less: 11p
- 1401cc to 2000cc: 13p
- Over 2000cc: 20p (was 21p)
Diesel
- 1600cc or less: 15p
- 1601cc to 2000cc: 16p (was 17p)
- Over 2000cc: 22p (was 23p)
Fully electric
- Home charger: 7p
- Public charger: 15p (unchanged this quarter)
The movement is modest but directional: large petrol up a penny; mid and large diesel down a penny; large LPG down a penny. Small and mid petrol, small diesel and the electric pair are flat. Hybrids are still treated as petrol or diesel for these rates — not as electrics.
You may keep using the 1 June to 31 August 2026 rates for up to one month after the change. That grace ends 30 September 2026. After that, systems and expense policies should already be on the September table.
Two different jobs — do not confuse them
Advisory fuel rates only apply to employees using a company car. They do two jobs:
1. Business mileage reimbursement — if you reimburse at or below the advisory rate for the engine size and fuel type, there is no taxable profit and no Class 1A NIC on that reimbursement.
2. Private fuel recovery — if the employee repays private mileage at the correct rate (or higher), and you keep proper records, you can avoid the car fuel benefit charge.
They do not apply to employees driving their own cars. Own-vehicle journeys use Approved Mileage Allowance Payments (AMAP): 55p for the first 10,000 business miles in 2026/27, then 25p; 55p for NIC on all business miles; motorcycles 24p; cycles 20p. Mixing AFR into AMAP (or the reverse) is a classic payroll error and a gift to a compliance review.
If you pay above the advisory rate for company-car business miles and cannot evidence a higher actual fuel cost per mile, the excess is taxable earnings and attracts Class 1 NIC. If you under-recover private fuel, you risk the full fuel benefit: £29,200 × appropriate percentage for 2026/27, with employee income tax and employer Class 1A at 15%.
Electricity is not “fuel” for car fuel benefit purposes. That distinction matters when EV policy, home chargers and public rapid networks sit in the same fleet pack.
Electric dual rates and apportionment
Since the public-charger split arrived, pure EVs need two rate lines, not one. Home charging sits at 7p; public slow/fast charging (under 50 kW in HMRC’s method) at 15p. Where a journey is charged at both home and public locations, HMRC expects a fair and reasonable apportionment of mileage. Boards that still reimburse every EV mile at a single blended figure without a documented method are building an evidence gap.
You can pay above the advisory electric rates if you can show actual cost per mile is higher — useful where public rapid charging (50 kW+) is materially above the Zapmap slow/fast index HMRC uses. Keep the cost evidence with the claim. Do not invent a “fleet average” and hope.
Pool cars and grey-fleet hybrids need the same discipline: hybrid = petrol or diesel band by primary fuel; pure EV = home/public split; plug-in hybrid is not an EV rate.
Why CFOs should care this week
Three practical failures keep showing up:
Stale expense systems. Many expense platforms and ERP mileage tables are updated manually. If June rates are still hard-coded on 2 October, every company-car claim is wrong by construction. Lock a 1 September change ticket now, with a 1 October forced cutover after the grace month.
Fuel-card private use without recovery. A fuel card that pays for all pump visits is not a tax-free benefit by magic. Unless private miles are recorded and repaid at the right rate (or higher), the fuel benefit charge sits on the table. The same logic applies to home EV chargers paid by the company without a private-use split.
Policy lag behind fleet mix. Diesel-heavy fleets will see a small rate cut this quarter; large petrol a small rise. EV fleets need dual rates and apportionment wording. If your staff handbook still quotes a single “company car mileage rate” from 2024, rewrite it.
Cross-check the live tables against GOV.UK advisory fuel rates and the employer pack at rates and thresholds 2026 to 2027. Do not rely on a shared spreadsheet last touched in June.
The bigger arc: company cars move into real-time payrolling
This quarterly tweak sits inside a larger control change. From 6 April 2027, mandatory payrolling of benefits in kind Phase 1 covers company cars, car fuel, vans, van fuel and medical benefits. Most other BiKs follow from April 2028. HMRC restated the agent actions in Agent Update 146: list your BiKs, prove payroll software can report Phase 1 items in real time, plan joiners/leavers and mid-year value changes, and start employee communications now so April 2027 does not look like “double tax” when current-year payrolling overlaps prior-year underpayments collected through the code.
Voluntary registration for payrolling other BiKs (including loans and accommodation) opens from November 2026. Final Phase 1 guidance and legislation are expected in autumn 2026. That is the same window in which your September and December AFR updates will run. Treat fleet data quality — CO2 bands, fuel type, private-use flags, fuel-card rules — as payrolling prep, not as a separate “mileage admin” silo.
Related reading on the employer side: PAYE for employers, expenses and benefits for employers, Class 1A on expenses and benefits, and travel mileage and fuel rates and allowances.
CFO lock-list before 30 September
1. Publish the September table in expense software, ERP mileage masters and any fuel-card reclaim calculator. Keep June rates only where the one-month grace is deliberately used, then hard-stop them on 1 October.
2. Separate AFR from AMAP. Company car vs own car must be different claim types with different validation.
3. EV dual rates. Home 7p / public 15p with a written apportionment method; retain cost evidence where you pay above advisory.
4. Private fuel recovery. Confirm every fuel-card and company-paid home charger has a private-mile capture and repayment process at or above AFR. Otherwise model the fuel benefit (£29,200 × appropriate %) and Class 1A at 15%.
5. Hybrid coding. Primary fuel type drives the band — not “feels electric.”
6. Above-rate payments. If you reimburse above AFR, keep contemporaneous cost-per-mile evidence or accept taxable earnings + Class 1 NIC on the excess.
7. Fleet data for 2027 payrolling. Clean car lists, fuel benefit flags, medical BiKs and software readiness against HMRC’s Phase 1 payrolling guidance. Use Agent Update 146’s communication brief so employees understand real-time collection is not a second charge on the same benefit year.
8. Audit trail. Keep the HMRC page snapshot, change ticket and payroll sign-off. Quarterly rate changes are exactly the sort of control a future review asks for.
Bottom line
1 September advisory fuel rates are a small number move with a large control footprint. Get the tables live, kill the stale June defaults after the grace month, police private fuel recovery, and treat clean fleet data as the first brick in April 2027 mandatory BiK payrolling. The pence-per-mile line is easy. The benefit charge and the real-time reporting programme are not.
Sources: HMRC advisory fuel rates · Employer rates and thresholds 2026–27 · AMAP / business travel rules · Fuel benefit charges 2026–27 · Travel mileage and fuel allowances · Mandatory BiK payrolling · Agent Update 146 · Employment Income Manual · Expenses and benefits for employers · PAYE for employers