From June 1, 2025, HMRC has introduced minor adjustments to the Advisory Fuel Rates (AFRs) for company car drivers, which determine how much employees can be reimbursed for business travel in company vehicles using the pence-per-mile (PPM) method.
While most changes are slight — just 1 penny per mile reductions in certain bands — the update presents a clear opportunity for businesses to re-evaluate how they manage fuel costs.
For sales professionals in the fuel card industry, this is the perfect moment to have a conversation with clients about switching from PPM reimbursement to fuel card systems.
🔧 Key Changes to AFRs (Effective June 1, 2025)
🚙 Diesel Company Cars:
- Up to 1,600cc: 🔻 Decreased from 12ppm → 11ppm
- 1,601–2,000cc: 🔁 Remains at 13ppm
- Over 2,000cc: 🔁 Remains at 17ppm
⛽ Petrol Company Cars:
- Up to 1,400cc: 🔁 Remains at 12ppm
- 1,401–2,000cc: 🔻 Decreased from 15ppm → 14ppm
- Over 2,000cc: 🔻 Decreased from 23ppm → 22ppm
⚡ Electric Cars:
- Advisory Electricity Rate (AER): 🔁 Remains at 7ppm
🌀 LPG Vehicles:
- 🔁 No changes across all engine sizes (11ppm to 21ppm)
Note: Hybrid cars are treated as either petrol or diesel for AFR purposes.
📊 What This Means for Employers
These small changes may seem negligible, but over time they can create gaps between actual fuel spend and reimbursement — especially with fluctuating fuel prices. Businesses relying on outdated or low AFRs may underpay staff or fail to reflect real-world costs, leading to admin headaches or unhappy drivers.
🛡️ Why Fuel Cards Are a Better Alternative (And a Great Sales Hook)
Here’s how fuel card sales reps can leverage these changes to win new business:
✅ 1. Real-Time Accuracy
Fuel cards capture actual fuel prices paid, rather than relying on fixed PPM assumptions that lag behind real market rates. This eliminates over- or underpayment disputes.
✅ 2. Full HMRC Compliance
Fuel card reporting is fully compliant and makes VAT reclaim and expense auditing simpler — especially versus tracking hundreds of paper receipts or mileage logs.
✅ 3. Better Cost Control
Employers get detailed transaction reports, location tracking, and can even set purchase limits — something that’s impossible with mileage-only reimbursements.
✅ 4. Improved Cash Flow
Reimbursing staff can delay cash flow and introduce risk. Fuel cards let the business control spend upfront and pay centrally, often with negotiated pricing benefits.
✅ 5. Driver Satisfaction
Drivers no longer need to pay upfront or do manual mileage calculations — reducing admin stress and improving morale.
💬 Talking Points for Sales Conversations
When reaching out to fleet managers, finance teams, or operations leads, try framing it like this:
“With AFR rates dropping again, there’s a growing gap between reimbursement and real-world fuel prices. Have you considered how much more accurate and cost-effective it would be to manage your fleet fuel spend using fuel cards instead?”
📚 Want to See the Full HMRC Rate Tables?
Check the official resource here:
👉 HMRC Advisory Fuel Rates (Gov.uk)
Final Word
The June 1 AFR updates may seem minor, but they highlight the limitations of the PPM system in a fluctuating fuel market. For businesses that want efficiency, accuracy, and control, fuel cards offer a modern solution — and sales reps who understand this can turn a regulatory update into a compelling sales opportunity.