Electric car rates for company car drivers increased
Plus latest petrol and diesel company car rates
For fleet drivers in electric cars, the benefit in kind cost savings on company car tax have been significant compared with a diesel or petrol company car.
Less helpful for the pocket have been the reimbursement rates for ‘refuelling’ with electricity, known as the Advisory Electricity Rates (AERs).
Similar to the Advisory Fuel Rates (AFRs) which are used for reimbursement of business mileage expensed by the employee for fuelling a diesel or petrol fleet car, the AERs – since 2018 maintained at 4p per mile – have been increasingly out of touch with the real cost of electricity used.
The Association of Fleet Professionals (AFP) and the British Vehicle Rental and Leasing Association (BVRLA) together have been campaigning for a rise in the rates, and following intensive conversations between the HMRC and the two trade organisations, the AERs have now increased by 25%.
Company car drivers of electric cars will now be able to charge 5p per mile for every business mile travelled to cover the cost of electricity used.
Gerry Keaney, Chief Executive, BVRLA, said:
“The EV market is maturing and is no longer a niche. We need a mileage recompense rate that can adapt to energy prices and charging trends, so we are pleased to see HMRC respond so swiftly to the lobbying from AFP and BVRLA.
“The AER for electric vehicles had not changed since 2018, this uplift is a positive move and shows that the Government is serious about providing a supportive environment for the push to zero emission motoring.”
Paul Hollick, Chair of the AFP, added that the original AER failed to cover reimbursement of fuel costs when most individuals were now paying closer to an estimated 18p per kWh even when charging at home.
“We very much welcome this move by HMRC,” he said. “In truth, 5ppm is probably still too low – recent research among our members saw 6-7ppm mentioned as an appropriate rate – but it does represent an increase of 25% in one step, which is quite substantial.
“Importantly, it establishes the principle of revisiting and revising the AER rate as part of conversations between industry bodies and HMRC, which is an important development.”
Meanwhile drivers of non-electric company cars will be relieved to know that the AERs have been boosted for both petrol and diesel models to take account of the surging prices at refuelling stations. Rates have been increased between 1ppm and 2ppm. Click here to view the latest HMRC Advisory Fuel Rates. These new rates can be used from 01 December onwards.
The New Advisory Fuel Rates
|Engine size||Petrol – rate per mile|
|1400cc or less||13 pence|
|1401cc to 2000cc||15 pence|
|Over 2000cc||22 pence|
|Engine size||Diesel – rate per mile|
|1600cc or less||11 pence|
|1601cc to 2000cc||13 pence|
|Over 2000cc||16 pence|
The advisory electricity rate for fully electric cars is 5 pence per mile.
Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.
Need help with management of fuel costs?
Talk to us about fuel management and how we can help you contain costs. Call 01283 351200 and speak to one of our fleet executives.