Experts have issued a renewed warning to all motorists who could see their running costs increase following a new HMRC update at the start of the month.
From March 1, HM Revenue and Customs introduced new advisory fuel rates (AFR), which are applied to employees using a company car.
These rates are used to reimburse employees for business travel in their company cars or when employees need to repay the cost of fuel (or charge) used for private travel.
HMRC reviews these rates four times a year, with the most recent update coming on March 1. Drivers can expect further rate updates in June, September and December.
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HMRC reviews advisory fuel rates four times per year
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Certain petrol and diesel drivers could unknowingly be hit with more expensive costs following the most recent update on March 1, with experts urging motorists to consider their options.
A spokesperson for BigWantsYourCar.com explained that the advisory fuel rate changes will add to the rising cost of running a company car.
They added: “For many businesses and employees, even a small increase per mile can have a big impact, especially for those covering significant distances.
“Drivers may want to reassess whether their current vehicle is still the most cost-effective option.”
Petrol and diesel rates are based on the latest data from the Department for Energy Security and Net Zero (DESNZ), while LPG costs are based on the UK average from the Automobile Association website.
While there are far fewer vehicles on UK roads which are powered with LPG, the miles per gallon (mpg) rate is 20 per cent lower than for petrol because of its “lower volumetric energy density”.
Rates for electric vehicles are calculated slightly differently through data from DESNZ, the Office for National Statistics, the Department for Transport and annual car sales volumes to businesses.
HMRC has outlined that hybrid vehicles are treated as either petrol or diesel cars for advisory fuel rates, although this will depend on the design of the vehicle.
Advisory fuel rates from March 1, 2025
Petrol
Engines up to 1,400cc – Remains at 12p
Between 1,401cc and 2,000cc – Hiked to 15p
Over 2,000cc – Remains to 23p
Diesel
Engines up to 1,600cc – Hiked to 12p
Between 1,601cc and 2,000cc – Remains at 13p
Over 2,000cc – Remains at 17p
LATEST DEVELOPMENTS:
The latest advisory fuel rates saw slight price hikes for certain petrol and diesel drivers
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Liquefied Petroleum Gas (LPG)
Engines up to 1,400cc – Remains at 11p
Between 1,401cc and 2,000cc – Remains at 13p
Over 2,000cc – Remains at 21p
Electric
All electric vehicles – Remains at 7p