Fleets to benefit from 25% increase in electric vehicle reimbursement rates

General Guides  HMRC / Tax 

Following the UK Government's announcement that Advisory Electricity Rates (AERs) for electric vehicles have increased by 25%, the Association of Fleet Professionals (AFP) and British Vehicle Rental and Leasing Association (BVRLA) have hailed the news as a win for fleets.

HMRC has increased the AER for electric vehicles (EVs) to 5p per mile, following extensive discussions between the government and the two trade organisations. Previously the rate was 4p per mile, which hadn't changed for three years.

Gerry Keaney, BVRLA chief executive, 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, AFP chair, said: “We very much welcome this move by HMRC. 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.”

HMRC has also increased the rates for company car drivers in petrol and diesel fleet cars to reflect the increasing cost of fuel at the pumps.

The new rates can be used from 01 December 2021.

Petrol AFR rate per mile

Engine size	Rate per mile
1,400cc or less	13 pence
1,401cc - 2,000cc	15 pence
Over 2,000cc	22 pence

Drivers of petrol hybrids should use this rate.

Diesel AFR rate per mile

Engine size	Rate per mile
1,600cc or less	11 pence
1,601cc - 2,000cc	13 pence
Over 2,000cc	16 pence

Drivers of diesel hybrids should use this rate.

Electric AER rate per mile

Battery size	Rate per mile
All models	5 pence

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