HMRC Advisory Fuel Rates: What Changed on 1 March 2026

HMRC's advisory fuel rates update on 1 March 2026, and if you drive a company car, these numbers directly affect what you can claim — or what you owe. This quarter: LPG rates dropped across the board, the EV public charging rate climbed to 15p per mile, and petrol and diesel stayed exactly where they were.

What are advisory fuel rates?

Advisory fuel rates (AFRs) are per-mile amounts set by HMRC every quarter. They apply in two situations — both involving company cars:

• Your employer reimburses you for business miles driven in a company car
• You repay your employer for private miles driven in a company car

If your employer pays at or below the advisory rate, there's no tax to report — HMRC treats it as cost-neutral. Pay above the rate and the excess becomes a taxable benefit. Simple enough, until you realise most drivers don't know the rates exist.

March 2026 petrol rates

No change from last quarter. Petrol advisory rates remain flat across all three engine size bands:

With pump prices hovering around 142p per litre nationally, the petrol rates roughly reflect what drivers are actually paying. A mid-size petrol car doing 35 mpg costs about 14p per mile in fuel alone — bang on the advisory rate. Use Fuelwise to check whether your local prices are above or below the national average.

March 2026 diesel rates

Also unchanged. Diesel rates held steady for another quarter:

Note that diesel uses different engine size bands than petrol — the first bracket cuts at 1,600cc rather than 1,400cc. It's a quirk of the system that catches people out.

March 2026 LPG rates — all down

The only fuel type to see a reduction this quarter. LPG rates dropped by 1–2p per mile across every band:

LPG remains the cheapest per-mile fuel on the advisory rate table, reflecting its lower pump price (typically 65–75p per litre). If your company fleet includes LPG-converted vehicles, the lower rates mean slightly less reimbursement per mile from this quarter.

Electric vehicle rates — the two-tier split

This is where it gets interesting. Since September 2025, HMRC has split the electric vehicle rate into two tiers — one for home charging and one for public charging. The logic is straightforward: public chargers cost roughly double what home electricity costs, so a single rate was always going to short-change one group of drivers.

Before the two-tier system, the flat advisory rate was 7p per mile. That worked fine for drivers who charged at home overnight. But anyone relying on public chargers — especially those without driveways or dedicated parking — was subsidising their employer's fuel bill to the tune of roughly £200 a year.

If you use a mix of home and public charging, you can apportion your mileage accordingly. For example, if you drove 1,000 business miles and charged 60% at home and 40% on the public network, you'd claim 600 miles at 7p (£42) plus 400 miles at 15p (£60) — totalling £102 rather than £70 under the old single rate.

Rate history at a glance

For context, here's how the EV advisory rates have evolved since the two-tier system launched:

The trend: home charging is getting fractionally cheaper (or holding steady), while public charging costs are creeping up. That mirrors the wider market — public charge point operators have been raising prices as they invest in infrastructure, while domestic tariffs have stabilised after the energy crisis.

What about hybrid cars?

Hybrids — both conventional and plug-in — are treated as either petrol or diesel depending on their engine type. There is no separate hybrid rate. A plug-in hybrid with a 1.5-litre petrol engine uses the petrol rates (14p per mile in the middle band), regardless of how much electric driving it does.

This is arguably unfair to PHEV drivers who do a significant chunk of their mileage on electric, but HMRC's position is that the advisory rates are averages — not personalised calculations. If your actual costs are lower than the advisory rate, that's a win. If higher, your employer can pay more — but they'll need evidence to justify it.

The transition period

Employers can continue using the previous quarter's rates (December 2025) for up to one month after the new rates take effect. That means the old rates remain valid until 31 March 2026. After that, the March 2026 rates must be used.

If you're a fleet manager, you've got a window to update your systems. If you're a driver, it's worth checking your next mileage claim uses the right figures — especially for LPG, where claiming the old rates after 31 March would mean over-claiming.

Do these rates affect you at the pump?

Not directly. Advisory fuel rates don't change what you pay per litre — they change what you can claim back per mile. But they're calculated from real pump prices, so they're a useful barometer of what HMRC thinks fuel actually costs right now.

The fact that petrol and diesel rates haven't moved suggests HMRC sees prices as stable. And according to Fuelwise price tracking data, they're not wrong — UK average unleaded has hovered between 140p and 144p per litre for several weeks.

Of course, averages mask big local variations. The difference between the cheapest and most expensive forecourt in the same city can be 10p per litre or more. Whether you're claiming mileage or paying out of pocket, filling up at the right station matters more than the advisory rate.

The bottom line

For most company car drivers, the March 2026 update is a non-event — petrol and diesel rates haven't budged. But if you drive an LPG vehicle, your reimbursement just got a little smaller. And if you drive an EV and rely on public chargers, the 1p rise to 15p per mile is a small but welcome acknowledgement that public charging isn't cheap.

The next review is due in June 2026. By then, the fuel duty increase planned for September 2026 will be looming large — and if it goes ahead, expect the advisory rates to follow suit.