AER — Advisory Electricity Rate
Benchmark mileage rate set by HMRC for reimbursing EV drivers.
From 1 September 2025: 8p/mile (home charging) and 14p/mile (public charging).
For fleet managers: a key reference for mileage claims, expense policies, and cost modelling. Using actual data instead of AER can justify higher reimbursements. See AER (2025) and HMRC guidance.
WLC/TCO — Whole-Life Cost / Total Cost of Ownership
Comprehensive cost measure for comparing EVs and ICE cars.
Includes: lease/purchase, depreciation, fuel/electricity, insurance, service, tyres, VED, CC/ULEZ, and resale value.
For fleet managers: the standard tool for procurement decisions and CFO reporting. Shows where EV savings offset higher list prices.
BiK — Benefit-in-Kind (company cars)
Tax employees pay on personal use of a company car.
Calculated as P11D value × BiK %, with the rate lower for EVs. Employers also pay NIC.
For fleet managers: directly impacts driver take-home pay and attractiveness of EVs in company car policies. Clear communication to staff is essential.
NIC — National Insurance contributions
Payroll contributions on salaries and benefits.
For company cars: employers pay Class 1A NIC on the BiK value.
For fleet managers: adds a hidden cost to fleet budgets — must be factored into WLC alongside BiK and lease/fuel costs.
VED — Vehicle Excise Duty (vehicle tax)
Annual UK road tax.
From 1 April 2025, zero-emission vehicles are no longer exempt from VED.
- First registration on/after 1 April 2025: Year 1 = £10, then £195 per year (standard rate) from Year 2.
- Expensive Car Supplement: if the vehicle’s list price is over £40,000, an additional supplement applies from Years 2 to 6.
- Vehicles first registered between 1 April 2017 and 31 March 2025 move to the standard rate (£195) at renewal after the change.
- Vehicles first registered between 1 March 2001 and 31 March 2017 remain at £20 per year.
Impact for fleets: remember to include Year-1 vs standard rates correctly in TCO models and apply the supplement where list price exceeds £40,000.
See GOV.UK: Vehicle Excise Duty and our VED (2025) guide.
Cleaner Vehicle Discount (CVD) / London Congestion Charge
The Cleaner Vehicle Discount (full exemption for eligible EVs and hydrogen vehicles) ends on 25 December 2025.
- From 26 December 2025, electric vehicles must pay the Congestion Charge unless covered by another exemption.
- A new daily charge of £18 has been proposed to take effect from 2 January 2026 (subject to final approval after consultation).
- Proposed adjustments to discounts for EVs (for example via Auto Pay) have been discussed; treat as provisional until TfL confirms the final scheme.
Impact for fleets: plan routing and budgeting for London from late-December 2025 onward; update driver guidance and cost allocations accordingly alongside WLC/TCO reviews.
See TfL’s ULEZ and Congestion Charge consultations for the latest updates.