New EV mileage rates for business drivers kick in next week

Drivers who use an electric vehicle for business purposes will be able to claim a higher mileage rate for public charging from next week.

New guidance on EV mileage rates from the Government has introduced a two-tier system for the first time to reflect the difference in charging costs between home and public charging.

As part of its advisory fuel rates review, HMRC has increased the home advisory electricity rate (AER) from 7p to 8p per mile and introduced a new rate of 14p per mile for public charging. The changes come into effect on Monday, September 1.

The new private AER is based on a domestic energy price of 27.04p per kWh and EV energy consumption of 3.59 miles per kWh (average based on sales). The public rate is based on a cost of 51p per kWh at “slow” or “fast” public chargers.

HMRC initially said the public AER would be 12ppm. However, it has subsequently admitted to an error in the calculation and revised it upwards to 14ppm. It also noted that businesses could use a higher rate where it could be proved the per-mile costs were higher.

The move goes some way to addressing a disparity between the cost of running a company EV and what a driver can claim back. In 2024, charging payment platform Paua estimated that a driver doing just 20% of business charging on the public network would be at least £200 out of pocket when reimbursed at the AER of 7ppm.

The new higher EV mileage rates have been welcomed, but fleet industry representatives argued that a third tier to cover more expensive ultra-rapid charging should also be considered.

Thomas McLennan, director of policy at the British Vehicle Rental and Leasing Association (BVRLA), said: “It is encouraging to see that HMRC continues to listen to the sector. The BVRLA and AFP have collaborated on this topic since 2021. Since then we’ve seen a regular review of AER introduced, plus this news that public and private rates will be split. Both were core changes we have pushed for.

“Policy change is rarely rapid, but this is a great reminder that change does come when we work together. Focus now turns to a ‘rapid charging’ rate as the current rate is not reflective of what many drivers will be experiencing.”

Peter Golding, CEO of fleet software specialist FleetCheck said that a fair payment for ultra-rapid charging also needed to be examined. He commented: “We’re very pleased to see split AERs introduced and the rate of 8p per mile for home charging seems fair to us, being generally reflective of real-world costs.

“However, the 14p rate for highway charging is arguably low. It is intended to cover use of some slower public chargers but there are instances when rapid charging is necessary from an operational point of view and the cost is typically much higher, perhaps doubling.

“When electric cars and vans are used for longer journeys, employers don’t want to have staff sitting around waiting for slower charging to complete. For them, rapid chargers are really a necessity that mean they can get workers back on the road as soon as possible. Without rapid charging, the practicalities of operating EVs are less attractive. This is why a rapid charge AER rate should be considered, especially as we see faster and faster chargers become more and more common across the public charging network. Public charging infrastructure is not homogenous – there are widely different charging speeds and prices – and this should be recognised in HMRC’s thinking.”