The Updated Advisory Fuel Rates from 01 September 2025

On 22 August 2025, HMRC advised the following rates that apply from 01 September 2025:

1. The Advisory Electricity Rates (now two rates instead of one), and
2. The Advisory Fuel Rates

Both are payable to either reimburse employees for business travel in a company car or to calculate the amount an employee should repay where are required to repay the cost of fuel used for private travel (in a company car).

Whilst these rates are effective 01 September 2025, employers can use the previous rates for up to one month, therefore, they must be in place by 01 October 2025.

Note these rates are advisory which means employers can pay at a higher rate if they can justify the costs per mile are higher.  If they cannot, the excess is profit and subject to tax and Class 1 NICs.

The Advisory Electricity Rate (AER)

Up to 31 August 2025, the advisory electricity rate for fully electric cars was a single rate of 7p per mile, reviewed quarterly.  From 01 September 2025, the rate has been split to make a differential between the advisory rate for home charging and that for public charging. 

From 01 September 2025, the rates are set out below:

The rates will continue to be reviewed every three months.

The Advisory Fuel Rates (AFRs)

The rates from 01 September 2025 are show below compared to the rates applying from 01 June 2025, with changes highlighted by *:

These rates are also reviewed every three months.

For Bookkeepers

As you will note, there are now two advisory electricity rates.  This means the rate is different for home charging compared to public charging.  To enable employers to use the correct rate, therefore, it is necessary to establish where the charging took place.