The amount that employers can reimburse staff for business travel in company cars changed from 1 September 2025. What are the new rates?
Advisory fuel rates (AFRs) for company cars are updated by HMRC on a quarterly basis due to fluctuations in fuel prices. The rates determine the amount that can be paid to an employee using a company car for business mileage, or where an employee has to reimburse their employer for private journeys. Providing HMRC’s rates are used, there are no income tax consequences for the employee. HMRC has now published the AFRs applicable from 1 September 2025.
| Engine Size | Petrol | LPG |
|---|---|---|
| 1400cc or less | 12p | 11p |
| 1401cc to 2000cc | 14p | 13p |
| Over 2000cc | 22p | 21p |
| Engine Size | Diesel |
|---|---|
| 1600cc or less | 12p |
| 1601cc to 2000cc | 13p |
| Over 2000cc | 18p |
The rate for fully electric vehicles continues to be 8p per mile if using a home charger, or (new for this quarter) 14p per mile if using a public charger. Hybrid cars are treated as either petrol or diesel cars for the purposes of advisory fuel rates.
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.