Advisory Fuel Rates vs Approved Mileage Rates: Which One Applies to You

Published 12th August 2026

HMRC publishes two completely separate sets of mileage figures, and mixing them up is the single most common error in company expense policies. One set is generous and changes almost never. The other is much lower and changes every three months. Which applies to you comes down to a single question: whose car is it?

The dividing line

Your own car: Approved Mileage Allowance Payments. 55p a mile for the first 10,000 business miles, then 25p. These rates are set in legislation and are meant to cover everything: fuel, insurance, road tax, servicing, tyres and depreciation.

A company car: Advisory Fuel Rates. Currently between 11p and 27p a mile depending on fuel type and engine size. These cover fuel only, because the company already owns and runs the car, and you are already being taxed on that benefit separately.

That is the whole distinction. It is not about whether you are a director, whether you are on PAYE, or whether the journey was long. It is about who owns the vehicle you drove.

The mistake to watch for: a company car driver being reimbursed at 55p a mile. The car is not theirs to depreciate, so the rate is far above the fuel cost, and the excess is a taxable benefit rather than a tax-free reimbursement. It usually surfaces at the payroll year end, by which point twelve months of it have been paid out.

Approved Mileage allowance payments

Vehicle	First 10,000 miles	Over 10,000 miles
Cars and vans	55p	25p
Motorcycles	24p	24p
Bicycles	20p	20p

Plus 5p per mile per passenger where you carry a colleague on the same business journey. Electric and hybrid cars use exactly the same rates as petrol and diesel: there is no separate AMAP figure for an employee's own EV.

The car and van rate went from 45p to 55p with effect from 6 April 2026. The 25p, 24p, 20p and 5p rates were left alone.

Advisory fuel rates

These are the rates from 1 September 2026. They are reviewed on 1 March, 1 June, 1 September and 1 December each year, so this table has a shelf life of three months.

Engine size	Petrol	Diesel	LPG
1400cc or less	14p	—	11p
1600cc or less	—	15p	—
1401cc to 2000cc	17p	—	13p
1601cc to 2000cc	—	16p	—
Over 2000cc	27p	22p	20p

For fully electric company cars the Advisory Electricity Rate applies: 7p a mile for home charging and 15p a mile for public charging. Plug-in hybrids are not treated as electric for this purpose. They use the petrol or diesel rate for their engine size, which surprises a lot of hybrid drivers.

When new rates come in you can carry on using the previous ones for up to a month, which gives payroll time to catch up rather than forcing a mid-month switch.

The same driver, two very different numbers

6,000 business miles in a 1.8 litre petrol car.

Own car: 6,000 × 55p = £3,300, all of it free of tax and National Insurance.
Company car: 6,000 × 17p = £1,020, free of tax and National Insurance.

The gap is not unfair. In the company car case the employer has bought, insured, taxed and serviced the vehicle, and the driver is paying benefit in kind tax on having it. The 17p is only there to cover the petrol.

Paying back private fuel

Advisory Fuel Rates have a second job. If your employer pays for all your fuel including private mileage, you are normally taxed on the car fuel benefit, which is a fixed charge that has nothing to do with how much private fuel you actually used. On low private mileage it can be very poor value.

The escape route is to reimburse the employer for every mile of private fuel, and the Advisory Fuel Rates are what HMRC accepts as the measure. Two conditions matter and both are strict: it has to be all of the private fuel, not most of it, and the repayment has to be made by 6 July following the end of the tax year. Miss either and the full charge applies for the whole year.

When an employer uses its own rate

Advisory Fuel Rates are a safe harbour rather than a ceiling. An employer that reimburses at or below the published rate does not have to prove anything: HMRC accepts there is no taxable profit.

Pay above the rate and the position reverses. The employer needs to show the higher figure genuinely reflects the fuel cost per mile for those particular cars, for example because they are heavier vehicles or do a lot of short urban journeys. Without that evidence, the excess is earnings and goes through payroll.

Paying below the advisory rate is allowed but has a consequence in the other direction: the employee is out of pocket on fuel they bought for the business, and unlike the own-car case there is no straightforward statutory relief for the shortfall.

Workplace and home charging

Electricity provided by an employer at the workplace for charging an employee's own electric vehicle is not a taxable benefit, and that applies whether the car is a company car or the employee's own. Home charging is more nuanced, which is exactly why the Advisory Electricity Rate is now split between the two: 7p for electricity the driver bought at home, 15p for a public charge point where the per-unit cost is far higher.

If your employer is still reimbursing a single flat electric rate for everything, that is a policy written before the split existed, and public charging is being under-reimbursed.

What to put in your Mileage log

The log itself is the same either way: date, start and end points, business reason, miles. What changes is what you multiply it by, and how the running total behaves.

Own car: keep a cumulative total for the tax year, because the rate drops from 55p to 25p once you pass 10,000 miles. Miss the crossover and your claim will be overstated.
Company car: no cumulative threshold to track, but you do need the engine size and fuel type on record, and you need to note which quarter each journey fell in, because the rate may have changed underneath you.

Company car drivers should also separate business from private miles clearly, because that split drives both the fuel reimbursement and any private fuel repayment.

A quick decision table

Situation	Rate to use
Employee's own car, employer reimburses	AMAP, 55p then 25p
Employee's own car, employer pays nothing	AMAP, claimed as tax relief
Company car, employer reimburses business fuel	Advisory Fuel Rate
Company car, employee repaying private fuel	Advisory Fuel Rate
Fully electric company car	7p home, 15p public
Plug-in hybrid company car	Petrol or diesel rate for the engine size
Employee's own electric car	AMAP, 55p then 25p

If you are on the own-car side of that table, our mileage claim calculator will work out the approved amount and, where your employer pays less, the shortfall you can claim relief on.