HMRC clarifies how fleets should apply new AER expenses

HMRC has published new guidance for employers on how to apply advisory electricity rates (AERs) when reimbursing company car drivers for EV mileage, following confusion since the new rates took effect on 1 September 2025.

The update confirms that drivers can now claim 8p per mile for home charging and 14p per mile for public charging. Where a vehicle is charged at both home and public locations, fleets can apportion mileage based on where charging occurs, provided the calculation is “fair and reasonable.”

HMRC also confirmed that higher reimbursement rates are permitted if fleets can demonstrate that actual electricity costs per mile exceed the advisory rate - for example, where public charging is more expensive.

The home charging rate assumes a cost of 27.04p per kWh, while the public charging rate is based on 51p per kWh.

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