How HMRC Advisory Fuel Rates Are Calculated

HMRC takes the average miles per gallon of company cars in each engine band, applies a fuel price, and converts the result to pence a mile. From 1 September 2026 the diesel rates are 15p, 16p and 22p. At the DESNZ price for the week of 26 October 2026, the real cost is 16.3p, 18.3p and 24.7p.

How does HMRC calculate advisory fuel rates?

HMRC divides the fuel price by the average mileage a car in that band gets from each litre. The advisory fuel rates guidance says the mean miles per gallon is “taken from manufacturers’ information, taking into account annual sales to businesses (Fleet Audits for the last 3 years)”. The rates are reviewed on 1 March, 1 June, 1 September and 1 December.

The sum is the same one you would do on a calculator. Pence per mile equals pence per litre, multiplied by 4.54609 litres to the gallon, divided by miles per gallon.

For the rates from 1 September 2026, HMRC’s workings use 179.2p a litre for diesel and 159.9p for petrol. Those prices match the DESNZ weekly road fuel prices for the week of 3 August 2026 (179.19p and 159.89p). So the rate that applies from September is built on prices from a month before.

What are HMRC’s own workings for September 2026?

The table below repeats HMRC’s published inputs and shows the arithmetic. The rate is the result rounded to the nearest penny.

Band	HMRC mean mpg	Price used	Calculated	Published rate
Diesel, 1,600cc or less	55.7	179.2p	14.6p	15p
Diesel, 1,601 to 2,000cc	49.6	179.2p	16.4p	16p
Diesel, over 2,000cc	36.6	179.2p	22.3p	22p
Petrol, 1,400cc or less	50.7	159.9p	14.3p	14p
Petrol, 1,401 to 2,000cc	42.8	159.9p	17.0p	17p
Petrol, over 2,000cc	27.2	159.9p	26.7p	27p

LPG is worked out the same way, at 95.0p a litre, and gives 11p, 13p and 20p. Hybrids are not a separate band: HMRC says “hybrid cars are treated as either petrol or diesel cars for advisory fuel rates”.

You can check any band yourself with the advisory fuel rates tool.

How far is the rate from what drivers pay at the pump?

The gap is 1.3p to 2.7p a mile for diesel this week, because the rate was set on a lower price. DESNZ recorded diesel at 199.22p a litre and petrol at 174.07p for the week of 26 October 2026, against 179.2p and 159.9p in HMRC’s workings.

Band	Published rate	Cost at 26 Oct 2026 prices	Gap
Diesel, 1,600cc or less	15p	16.3p	1.3p
Diesel, 1,601 to 2,000cc	16p	18.3p	2.3p
Diesel, over 2,000cc	22p	24.7p	2.7p
Petrol, 1,400cc or less	14p	15.6p	1.6p
Petrol, 1,401 to 2,000cc	17p	18.5p	1.5p
Petrol, over 2,000cc	27p	29.1p	2.1p

These use HMRC’s own mpg figures, so a particular car can do better or worse. For a driver covering 10,000 business miles in a diesel car over 2,000cc, 2.7p a mile is about £270 a year that they pay out of their own pocket if the employer pays only the published rate.

The lag would work in the other direction if prices fell. The next review is on 1 December 2026, and it will pick up the autumn price rise. HMRC also lets you use the previous rates for up to one month after new rates apply.

Can I pay more than the advisory fuel rate?

Yes, HMRC allows it, but the tax treatment depends on what you pay and whether you can justify it. HMRC says that if the mileage rate you pay is no higher than the advisory rate for the car’s engine size and fuel type, “there will be no taxable profit and no Class 1A National Insurance to pay”.

HMRC also says that if you “pay rates that are higher than the advisory rates but cannot show that the fuel cost per mile is higher, there will be no fuel benefit charge if the mileage payments are only for business travel”. The practical way to pay more is to keep evidence of the actual cost per mile, such as the fuel price paid and the car’s real mpg.

If you pay above the published rate on a regular basis, agree the treatment with your payroll adviser first. The advisory rates are for company cars only. HMRC says: “You must not use these rates in any other circumstances.”

When do advisory fuel rates apply?

They apply to company cars in two cases: when you reimburse an employee for business travel, and when an employee repays you for private fuel. For private fuel, HMRC says there is no fuel benefit charge if you “correctly record all private travel mileage and use the correct rate (or higher)”.

They do not apply to a car the employee owns. That is covered by the approved mileage rates of 55p and 25p. The difference is explained in advisory fuel rates vs mileage allowance, and electric cars have their own pair of rates, covered in advisory electric rate, home vs public charging.

Frequently Asked Questions

How are advisory fuel rates calculated?

HMRC takes the mean miles per gallon for each engine size and fuel type, using manufacturers’ information weighted by sales to businesses over the last three years. It combines that with a fuel price and converts to pence a mile. The result is rounded to the nearest penny and reviewed every quarter.

How often do advisory fuel rates change?

HMRC reviews them on 1 March, 1 June, 1 September and 1 December. The current rates apply from 1 September 2026, and the next review is 1 December 2026. You can use the previous rates for up to one month after a change.

Why are advisory fuel rates lower than my real fuel cost?

Each rate is built on a fuel price from before the quarter starts and on the average mpg of a band. When pump prices rise during the quarter, the gap opens. At the DESNZ prices for the week of 26 October 2026, diesel costs 16.3p, 18.3p and 24.7p a mile in HMRC’s three bands, against rates of 15p, 16p and 22p.

Can I pay more than advisory fuel rates?

You can. HMRC says there is no fuel benefit charge on higher rates if the payments are only for business travel, and it separately says there is no taxable profit or Class 1A National Insurance when the rate is no higher than the advisory rate. Keep evidence of the actual cost per mile if you pay more.

Do hybrids have their own advisory fuel rate?

No. HMRC treats hybrid cars as either petrol or diesel for advisory fuel rates. Fully electric cars have their own rates.

Cut your fleet’s fuel bill

Put your own vehicles through the advisory fuel rates tool to see the rate, the real cost per mile at this week’s price, and the gap across your fleet. Fuel is the part of the bill that moves every week, which is why it is worth controlling.

A speed cap works on the fuel itself. The Department for Transport’s fuel consumption curves (TAG data book v2.03, May 2026, published on GOV.UK) show a diesel van using 14.5% less fuel per mile at 60 mph than at 68 mph. Your fleet-wide saving depends on the share of your miles driven above the cap.

AutoKontrol has been making speed limiters in Britain since 1985. If you want to know what a cap would do to your fuel bill, book a free consultation or get a quote. If you also want tracking, TrackSpeed puts a speed limiter and GPS tracking in one device.