Advisory fuel rates June 2026: petrol and diesel rise, EV rate holds at 7p

News · 2 Jun 2026 · Car Deal Expert Editorial Team

HMRC has lifted its petrol, diesel and LPG mileage rates from 1 June 2026 while leaving the electric rate frozen, and that single decision widens the running-cost gap that already favours a company EV. The advisory fuel rates June 2026 changes push a thirsty diesel to 23p a mile at the top band, yet a payrolled electric car still reimburses at 7p for home charging. If you run a premium EV through salary sacrifice, the maths just tilted a little further your way. Worth reading alongside our Audi Q4 e-tron salary sacrifice.

What advisory fuel rates are, and who they touch

Advisory Fuel Rates (AFRs) are the pence-per-mile figures HMRC publishes each quarter so employers can reimburse company-car drivers for business mileage without creating a taxable benefit. They run the other way too: where an employer pays for all fuel, the same rates set what an employee must repay to cancel the private-fuel benefit charge. The figures are not a cap, but they are the safe harbour. Reimburse at or below the rate for business miles and there is no Income Tax or National Insurance to settle. According to HMRC’s advisory fuel rates guidance, the new figures apply from 1 June 2026, with the page last updated on 22 May 2026. The same exercise on the Polestar 4 salary sacrifice arrives at a different answer.

The 1 June 2026 rates in full

Petrol and diesel both rose against the March 2026 quarter. Petrol up to 1400cc moved from 12p to 14p; diesel up to 1600cc jumped from 12p to 15p, a sharp 25% rise. LPG nudged up across the board. The electric figures held: the Advisory Electricity Rate stays at 7p a mile for home charging and 15p for public charging, exactly as it was from 1 March to 31 May 2026. Here is the full table for the quarter starting 1 June 2026.

Why the flat electric rate matters for premium EV drivers

For a higher earner running a BMW i, Mercedes EQ, Polestar, Tesla, Audi e-tron or the new Range Rover Electric on the payroll, the frozen Advisory Electricity Rate is quietly the most useful line on the page. Combustion reimbursement keeps climbing with pump prices, but the electric figure has sat at 7p for home charging through two quarters now. That stability keeps business-mileage budgeting simple and the gap to a petrol or diesel equivalent wide. If you are still weighing the broader case, our BMW i4 salary sacrifice 2026 breakdown shows where the payroll route already wins before fuel enters the sum.

A worked reimbursement example: diesel versus EV

Take 1,000 business miles in a quarter. A large diesel over 2000cc now reimburses at 23p a mile, so the driver claims £230. The same 1,000 miles in a company EV charged at home draws 7p a mile, or £70: a £160 gap on an identical trip, repeated every quarter. Even if every mile is topped up on the public network at 15p, the EV claim is £150, still £80 below the diesel. Scale that to 10,000 annual business miles and the home-charged EV saves £1,600 a year on reimbursed fuel alone. The premium for combustion mileage has simply grown.

How this strengthens the salary-sacrifice EV case

Reimbursed business mileage is only part of the story. The bigger draw for a 40% taxpayer is that the lease is paid from gross salary, cutting Income Tax and employee National Insurance, with only a small Benefit-in-Kind charge to settle. Per HMRC’s company-car appropriate percentages, the BiK rate for a zero-emission car in 2026/27 is 4% (checked 2 June 2026). On a £60,000 P11D EV that is a £2,400 taxable benefit, costing a higher-rate driver £960 a year in tax. Set against tax and NI relief on the sacrificed lease, plus 7p-a-mile running costs, the combustion alternative looks expensive. Our Tesla Model 3 salary sacrifice 2026 numbers show how the relief stacks up month by month. For a side-by-side, see our Mercedes EQE saloon salary sacrifice.

What to check before you rely on 7p

The headline rate is generous, but it assumes home charging. First, read your employer’s policy: some firms reimburse at the published AER, others run a bespoke pence-per-mile rate or a charge-card scheme, and the two can diverge. Second, sense-check the 7p against your real electricity cost. A driver on a cheap overnight EV tariff may genuinely pay less than 7p a mile, leaving a small surplus, while anyone leaning on public rapid chargers at 60p to 80p per kWh will spend well above even the 15p public AER. The rate is a tax-safe reimbursement figure, not a promise of what charging costs you.

Our take on the advisory fuel rates June 2026 changes

The advisory fuel rates June 2026 update is good news dressed as routine admin. HMRC has simply let combustion reimbursement track rising pump prices while leaving the electric rate alone for a second quarter. The effect is to make a salary-sacrifice EV look even sharper next to a diesel company car, especially for a higher-rate taxpayer who charges at home. We would treat the frozen 7p as a planning gift rather than a guarantee, which is exactly what a fleet manager and a premium EV driver both want. The one caveat is honesty about charging: if your reality is public rapid charging, the 15p rate and your real bills tell a less rosy story than 7p. For most home-charging drivers, this quarter quietly reinforces the case for going electric on the payroll.

For more on running an electric company car, browse our EV coverage.