HMRC has published new advisory fuel rates from the 1st September 2025. These are the rates employers can use to reimburse employees for business mileage in company cars without creating a tax charge. 

If an employer does not cover the cost of fuel for a company car, these rates can also be used to reimburse employees for their business journeys.

Previous rates are shown in brackets. Employers can continue to use the old rates for up to one month after the new rates take effect. 

For hybrid cars, use the petrol or diesel rate. 

For fully electric cars, HMRC has introduced a split rate for the first time: 

• 8p per mile (7p), where the car is charged at home 

• 14p per mile, where the car is charged at public facilities 

Employees using their own cars 

For employees driving their own vehicles on business: 

• The tax-free reimbursement rate (AMAP) remains 45p per mile for the first 10,000 miles, then 25p per mile. 

• An additional 5p per mile can be claimed for each passenger. 

• For NIC purposes, employers can continue to pay 45p per mile without applying the 10,000-mile cap. 

VAT considerations 

Within the 45p/25p AMAP rates, the amounts in the table above represent the fuel element. Employers can reclaim input VAT equal to 20/120 of the fuel element, provided the claim is backed by a VAT receipt. 

For example, with a 1300cc petrol car, 2p per mile can be reclaimed as input VAT (12p × 1/6).