HMRC has released new Advisory Fuel Rates (AFRs) that came into effect on 1 December 2025. These rates determine how much company car drivers can claim tax-free for business mileage, and will remain in place until 1 March 2026.
December 2025 Advisory Fuel Rates
Petrol Vehicles
| Engine Size | Rate per Mile |
|---|---|
| Up to 1,400cc | 12p |
| 1,401cc to 2,000cc | 14p |
| Over 2,000cc | 22p |
Diesel Vehicles
| Engine Size | Rate per Mile |
|---|---|
| Up to 1,600cc | 12p |
| 1,601cc to 2,000cc | 13p |
| Over 2,000cc | 18p |
LPG Vehicles
| Engine Size | Rate per Mile |
|---|---|
| Up to 1,400cc | 11p |
| 1,401cc to 2,000cc | 13p |
| Over 2,000cc | 21p |
Electric Vehicles
| Charging Location | Rate per Mile | Change |
|---|---|---|
| Home charging | 7p | Down from 8p |
| Public charging | 14p | Unchanged |
Key Changes This Quarter
The main change for December 2025 is the reduction in the home charging rate for electric vehicles, which has dropped from 8p to 7p per mile. This reflects falling domestic electricity costs.
Petrol, diesel, and LPG rates have remained stable, indicating consistent fuel prices over recent months.
Mixed Charging for Electric Vehicles
For journeys where a company car is charged at both public and home locations, you can apportion the mileage based on how much charging happens at each place. The calculation should be fair and reasonable.
Hybrid Vehicle Rates
Hybrid vehicles use the standard petrol or diesel rates based on their engine size – there's no separate category for hybrids.
Transitional Period
The previous rates from 1 September 2025 can continue to be used for up to one month – so until 1 January 2026. This gives employers time to update their systems.
Tax Implications
Reimbursement at or below the advisory fuel rate is:
- Tax-free for the employee
- Exempt from National Insurance contributions
If employers reimburse above the AFR, they must provide evidence of actual per-mile fuel costs. Any excess without proper justification is subject to tax and NI.
Important Reminder
These rates apply to company cars only. If you use your own car for business, the approved mileage allowance payments (45p for the first 10,000 miles, 25p thereafter) apply instead.