New Advisory Electric Rate for Fully Electric Company Cars

Burgis & Bullock is advising clients that HMRC has updated its Advisory Fuel Rates (AFRs), which now includes the Electric Rate (AER) for fully electric company cars. These changes take effect from 1st September 2025 and reflect the increasing use of electric vehicles in business travel.

AFRs are reviewed quarterly and are designed to simplify the process of reimbursing employees for fuel costs incurred during business travel and repaying employers for private fuel usage in company cars. Historically, AFRs have only covered petrol, diesel, and hybrid but not electric cars. This was on the basis that electricity is not considered to be a fuel. However, the latest update now includes electric cars, introducing two separate rates depending on where the vehicle is charged:

–  8p per mile for home charging
– 14p per mile for public charging (slow or fast chargers under 50kW)

Commenting Emma Fisher, Senior Corporate Tax Manager said: “These rates are based on average electricity costs and vehicle efficiency, weighted by car sales. The higher rate for public charging reflects the increased cost of using commercial charging points.

“Where a journey involves both home and public charging, HMRC have said that the mileage claim can be apportioned based on usage, but this must be done on a just and reasonable basis. If the actual cost per mile from a public charger exceeds the advisory rate of 14p, a higher rate may be used, but only if the cost per mile can be evidenced.”

The introduction of these two rates does add additional complexities and administrative burden to such calculations. We recommend employers review and update reimbursement policies, ensure employees understand how to track and evidence charging costs, and adjust payroll systems to accommodate these rate changes.

HMRC inspections frequently focus on mileage claims. The rate changes making this a timely opportunity to revisit the rules around business versus private journeys — an area that can be complex and easily misinterpreted.

Note, there have been no changes as to how Hybrid cars are treated, which continue to be treated as petrol or diesel for AFR purposes.

Should you require any guidance or support, please contact your local Burgis & Bullock office:

www.burgisbullock.com/contact-us/