Fair or Unfair?

What we know so far?

• From 1 September 2025, HMRC splits the Advisory Electricity Rate (AER) for fully electric company cars: 8p/mile for home charging and 14p/mile for public charging. Rates are reviewed quarterly (Mar/Jun/Sep/Dec). (GOV.UK)

• HMRC’s method uses DESNZ and ONS electricity data, DfT efficiency data, and Zapmap pricing for public charging. (GOV.UK)

• You may pay above advisory rates if you can evidence a higher cost per mile; if you pay above without evidence, the excess is taxable/NIC‑able. A one‑month transition lets you use prior rates until 30 September 2025. (GOV.UK)

• HMRC corrected its initial public‑charging figure to 14p (from 12p) on 26 August 2025. (GOV.UK)

• This change concerns company cars. For employees’ own cars (grey fleet), AMAP remains 45p/mile for the first 10,000 miles and 25p/mile thereafter. (GOV.UK)

Why this is a policy game‑changer

1. Equity risk

   Two drivers doing the same job can now be reimbursed at different rates purely due to charging access. That’s a fairness red flag and a cultural risk if left unmanaged. (Opinion)

2. Finance risk

• Pay 14p across the board and you’ll overpay for home-charged miles.

• Pay 8p across the board and you’ll under-reimburse public-charged miles (and attract disputes or taxable top-ups). (Opinion)

  Either way, your TCO model is already off unless it reflects charging context. (Opinion)

3. Compliance & controls

   The split forces evidence: you must know where a charge occurred (home vs public) and keep proof if you pay above advisory. Without evidence, excess payments become taxable/NIC. (Facts from HMRC; interpretation ours) (GOV.UK)

The impact in numbers

• Suppose a driver does 12,000 business miles/year, with 30% of miles charged in public.

• Weighted AER = 0.7×8p + 0.3×14p = 9.8p/mile.

• If you’ve been paying a flat 8p, you’re short by 1.8p/mile → £216/driver/year. Across 50 drivers, that’s £10,800/year under‑reimbursement (or latent liability if you “true‑up”).

• Conversely, paying 14p flat would over‑spend by 4.2p/mile on every home‑charged mile.

  (Arithmetic by us; policy context per HMRC.) (GOV.UK)

What good looks like: 3 policy patterns you can adopt now

Option A — Dual‑rate with evidence (most accurate, more admin)

• Reimburse 8p for miles linked to home charging; 14p for public charging, based on receipts/charge‑session logs (or telematics/charge‑point exports).

• Where actual public cost/mile exceeds 14p (e.g., motorway rapid), reimburse actuals with evidence, as HMRC permits higher rates with proof. (GOV.UK)

  Option B — Blended default + verifiable top‑ups (balanced)

• Pay a role/route‑based blended rate (e.g., 10.0–10.5p/mile) derived from expected public‑charging share; allow top‑up claims at 14p or actuals where evidence shows higher public costs.

  Option C — Public‑charging allowance, flat AER for mileage (low friction)

• Keep mileage at 8p (home), and add a separate, capped public‑charging allowance for drivers without home access, granted against receipts. Keeps payroll simple while addressing equity.

Guardrails: If reimbursing above advisory without proof, treat the excess as taxable/NIC. For grey fleet, none of this applies—AMAP still rules (45p/25p). (GOV.UK)

7‑day action plan

1. Freeze ad‑hoc arrangements; communicate the HMRC change internally. (GOV.UK)

2. Decide your model (A/B/C) based on driver access to home/workplace charging. (Opinion)

3. Set evidence rules: accepted proofs (public charge receipts, RFID/app logs, wallbox statements). (Opinion informed by HMRC evidence requirement) (GOV.UK)

4. Publish a blended baseline or dual rates; document when actuals apply. (Opinion)

5. Update payroll/expense systems (rate tables, fields for charging location). (Opinion)

6. Retro‑reconcile September (transition month) and brief HR on equity language. (Fact on transition; implementation is opinion) (GOV.UK)

7. Review quarterly as HMRC updates land; re‑tune your blended rate and budgets. (Facts on quarterly cadence; action is opinion) (GOV.UK)

A Copy‑paste policy language (Template)

EV mileage reimbursement — company cars

From 1 September 2025, we apply HMRC’s advisory electricity rates for business mileage in company EVs: 8p/mile (home charging) and 14p/mile (public charging). Where evidenced public charging results in a higher cost per mile, we will reimburse actuals in line with HMRC guidance. Claims must include proof of charging location and cost (e.g., receipts, charging‑app export, wallbox report). Payments above advisory without evidence will be treated as taxable earnings and subject to NIC. (Anchored on HMRC rules.)(GOV.UK)

FAQ

• Does this change grey‑fleet rates? No. AMAP (45p/25p) still applies to employees’ own cars. (GOV.UK)

• Can we use 7p in September? HMRC allows using prior rates for one month from the new rate date (i.e., until 30 September 2025). (GOV.UK)

• Are hybrids included? Hybrids follow petrol/diesel AFR, not the EV AER. (GOV.UK)

What to get in mind?

If you haven’t explicitly updated policy, controls and comms for the 8p/14p split, your numbers are already wrong and the fairness narrative is working against you.

Next in this series: we’ll turn the split into savings by optimising home/workplace charging access, setting role‑based blended rates, and automating evidence capture.

Sources (key HMRC pages)

• HMRC Advisory fuel rates (rates, method, evidence, transition month). (GOV.UK)

• Fleet News confirming the 12p→14p correction for public charging. (Fleet News)

• HMRC AMAP example for employees’ own cars (45p/25p unchanged). (GOV.UK)