Executive summary
From 1 June 2026, HMRC’s current split Advisory Electricity Rate for fully electric company cars is:
- 7 pence per mile for home charging (was 8p, Sept–Nov 2025)
- 15 pence per mile for public charging (was 14p, Sept 2025-May 2026)
The split was introduced on 1 September 2025 at 8p/14p, then moved to 7p/14p from 1 December 2025 before the public rate increased to 15p from 1 June 2026.
The intention is simple – to reflect the real cost gap between domestic and public charging. In practice, it has created a more complex reimbursement landscape, with:
- fleets unsure how to apply the split in day-to-day mileage claims
- drivers aware of the 15p public rate but unsure when they are entitled to it
- finance teams worried about HMRC exposure if they “get it wrong”
This guide explains the choices available under HMRC’s advisory-rate guidance, the practical methods UK fleets use and the controls needed for a reviewable reimbursement process. It also shows where the Company EV Reimbursement Pack can help without claiming HMRC certification.
1. How HMRC’s advisory rates can be used
HMRC’s Advisory Electricity Rate is the pence-per-mile benchmark used when:
- reimbursing employees for business mileage in an electric company car, or
- asking employees to repay the employer for private mileage in a company EV.
Employers are not obliged to use HMRC’s published rates. They may use their own rates where these better reflect the underlying cost. If an employer uses the home/public rates for mixed charging, HMRC permits a fair and reasonable apportionment.
A practical reimbursement process should therefore:
State which rate method is being used and why
- Home charging → 7p per mile
- Public charging → 15p per mile
These are the current published benchmarks. An evidenced internal rate or a fair and reasonable apportionment may be more appropriate for a particular employer.
Hold proportionate evidence for the chosen method
Evidence becomes especially important where the employer uses its own rate or reimburses above the published advisory amount because actual costs are higher.
Employers should be able to demonstrate why 15p was paid, for instance via:
- driver declarations confirming there is no home charging
- receipts or logs from public charge points
- telematics or app data showing public charging sessions
Maintain a clear, documented policy
HMRC does not prescribe a single technical method for mixed charging. A fair and reasonable apportionment may be used.
A defensible policy should explain:
- who is eligible for 7p vs 15p
- how the charging mix is determined (per driver, per trip, or via cost-based rules)
- what evidence is required for any mileage paid at the higher rate
Update rates when HMRC changes them
HMRC now reviews advisory rates quarterly (March, June, September, December). When rates change, your reimbursement policy and expense templates should be reviewed and updated accordingly.
Even where the rate does not move in a given quarter, being able to show that you checked and documented your decision is an important part of being audit-ready.
Key point: HMRC allows employers to pay above or below the AER – but any amount above the published rate must be backed by evidence of actual cost per mile. Paying more without proof can lead to the excess being taxed as a benefit.
2. Main reimbursement-control risks for UK fleets in 2026
Based on guidance from HMRC, industry commentary and fleet professional bodies, several recurring risks have emerged:
Risk 1 – Paying 15p without clear evidence
Using a rate without documenting its scope and cost basis makes the decision harder to review and can create inconsistent payroll treatment.
Practical control:
Where reimbursement exceeds a published advisory rate, retain evidence that the actual cost per mile was higher.
Risk 2 – Defaulting to 7p and under-paying drivers
A 7p flat rate may under-reimburse drivers who rely heavily on public charging. A flat rate is not automatically wrong, but the employer should be able to explain the cost basis and fairness of the method.
Impact:
- drivers may feel they are effectively subsidising business travel
- morale and retention can be affected in high-mileage roles
- disputes and complaints can increase, especially as drivers become more aware of the 15p public rate
Risk 3 – Inconsistent or undocumented processes
If there is no written policy, or if the rules are applied differently across teams, it becomes very difficult to defend the approach in an HMRC review – or to explain it fairly to employees.
Typical symptoms include:
- similar drivers in similar roles being reimbursed at different rates
- case-by-case exceptions with no audit trail
- local spreadsheets that do not match central finance policy
Risk 4 – Weak or missing audit trail
A reviewable decision trail should show:
- how the rate for each claim (7p vs 15p vs any other rate) was determined
- what evidence supports any mileage reimbursed at higher rates
- how policies and rates have been updated when HMRC’s AER changed
Missing or inconsistent records make it harder to support the chosen treatment and resolve payroll questions.
Risk 5 – Out-of-date rates and policies
The AER used to be relatively static. With a quarterly review cycle and volatile energy prices, policies can fall out of date quickly.
Examples of where fleets run into trouble:
- continuing to use an old rate or an undocumented flat rate without reviewing its cost basis
- failing to align internal documentation with the latest HMRC announcement
- not diarising rate review dates – or relying on manual, ad hoc checks
A simple controls framework – with ownership, reminders and a standard update process – significantly reduces this risk.
3. Practical methods UK fleets are using
Because HMRC has deliberately left room for judgement, UK fleets have adopted a small number of pragmatic approaches to apply the split rate:
Method A – Split by driver (home charger declaration)
Drivers declare whether they have access to home charging. Policy rules:
- driver has a home charger → business mileage reimbursed at 7p per mile
- driver does not have home charging → business mileage reimbursed at 15p per mile
Advantages:
- simple and cheap to administer
- broadly fair for the majority of drivers
- creates clear evidence for HMRC via signed declarations
Limitations:
- does not perfectly capture mixed charging patterns (e.g. some public use for “home charger” drivers)
Method B – Single 7p rate as a temporary workaround
Some organisations continue to use a single rate for all EV business miles, typically 7p per mile (the home rate), because their systems cannot yet support a split rate.
Advantages:
- very low HMRC risk (you cannot overpay relative to the advisory rate)
- no change required to expense or payroll systems
Limitations:
- under-compensates drivers who rely on public networks
- can cause fairness issues and HR pressure
- should be documented explicitly as a temporary workaround, not a long-term solution
Method C – Evidence-based split by trip
Under this method, drivers specify for each claim which miles were powered by home vs public charging and provide supporting evidence for the public portion (receipts, logs from charging apps, telematics data).
Advantages:
- precise alignment between reimbursement and real charging costs
- strong audit trail for 15p mileage
Limitations:
- higher administrative load for drivers and finance teams
- requires disciplined record-keeping and clear guidance to avoid errors
Method D – Hybrid approach (default 7p + controlled 15p exceptions)
A hybrid approach combines the simplicity of a default 7p rate with clearly-defined exceptions where 15p is allowed for specific drivers, trips or periods that are predominantly public-charged, backed by evidence.
Advantages:
- balances fairness for high public-charging drivers with controllable administration
- provides a structured way to handle edge cases without rewriting all systems at once
Limitations:
- requires a clear definition of when exceptions apply
- needs monitoring to prevent “exception creep”
4. Reimbursement decision and evidence checklist (2026)
Use this checklist to assess whether Finance and Payroll can explain the current EV mileage reimbursement process and apply it consistently:
- ✅ Written policy in place – Clear rules on when 7p vs 15p is paid, how charging type is determined, and what evidence is required.
- ✅ Consistent rate logic – Drivers in similar situations are treated within the same framework, with documented exceptions only where justified.
- ✅ Defined method for home vs public apportionment – For example: driver declarations, expense claim flags, telematics, or a cost-based rule.
- ✅ Evidence collection for 15p mileage – Receipts, charging app logs, declarations or reports that demonstrate higher costs per mile where 15p (or a higher rate) is used.
- ✅ Quarterly review of HMRC rates – Named owner, diarised check around HMRC AER update dates, and a simple record of each review and outcome.
- ✅ Driver communication and training – Guidance explaining the policy, the 7p / 15p split, and what drivers need to do when submitting claims.
- ✅ Audit-ready record keeping – A practical way to retrieve, for any claim sample, the policy version in force, the applied rate and the supporting evidence.
- ✅ Management oversight and periodic sampling – Periodic review of claims or driver groups to make sure the policy is working as intended and remains fair.
If several of these items are missing or partially implemented, it is worth structuring a short policy-and-controls project rather than making incremental, undocumented tweaks.
5. How EV Decision Compass helps UK fleets
EV Decision Compass offers a Company EV Reimbursement Pack – a structured, time-boxed way for UK employers to document the scope, rate decision, exceptions and operating controls.
Within three UK business days after complete inputs, we help fleet, Finance and Payroll teams to:
- Document the reimbursement methodology – We map the fleet profile and systems constraints to a practical method that is fair, reviewable and usable by the operating teams.
- Produce policy wording and driver communication – You receive ready-to-sign policy language and driver comms that explain the 7p / 15p logic in plain English, including how claims should be submitted and what evidence is required.
- Model cost and fairness scenarios – We run scenarios to quantify how different approaches affect driver reimbursement and overall fleet cost, flagging any edge cases that may need bespoke treatment.
- Strengthen audit readiness – We provide simple templates for declarations, evidence collection and record keeping so that, if HMRC reviews your approach, you can show a clear, reasonable methodology.
The Company EV Reimbursement Pack does not replace legal or tax advice. It provides an operational framework to align with advisers and implement through the existing process.
6. Next steps and further reading
If your fleet already runs company EVs in the UK, now is the right moment to check whether the reimbursement decision, evidence and controls still reflect the current guidance and operating reality.
Suggested next actions:
- Run the checklist above against your current EV mileage policy.
- Identify gaps in documentation, evidence collection and rate updates.
- Decide whether a driver-based, trip-based or hybrid approach best fits your systems and culture.
- If you need structured help, review the Company EV Reimbursement Pack.
CTA:
Review the pilot scope and see the illustrative output before booking.
Further reading (EV Decision Compass blog)
Explore related analysis and policy updates on the EV Decision Compass blog:
- Three Checks for a Clear Company EV Reimbursement Process
- HMRC fixes the new Advisory Electricity Rates
- Charging costs: home vs petrol
- UK EV charger data access obligations
Each of these posts gives additional context on AER updates, charging economics and open-data requirements that sit behind this guide.