The latest advisory fuel rates for electric company cars
As electric vehicles (EVs) provided as company cars are a relatively new employee benefit, the rules and advice surrounding them are developing and have been the subject of many changes over the last few years.
What are the Advisory Fuel Rates (AFRs)?
AFRs allow employers to reimburse employees for fuel costs incurred in respect of business travel in a company car. These rates are the maximum amounts per mile that can be reimbursed to an employee free of tax and National Insurance Contributions (NICs). If the amount stays within this limit, there will be no tax or NICs due on the payment. Updated AFRs are published quarterly by HMRC to account for changes in the price of fuel.
What has changed?
Previously, a single rate applied to all electric company car mileage. From 1 September 2025, HMRC has introduced a two-tier Advisory Electric Rate (AER) to reflect the differing costs of charging at home and at public charging points:
Location of charging facility | Rate per mile |
Home | 8p |
Public | 14p |
This change recognises that public charging is typically more expensive than home charging.
What if charging happens at multiple locations?
A potential challenge for businesses to consider is where an employee has partially charged their EV at home and at a public facility. In these cases, HMRC has said that employers can apportion mileage based on how much charging took place at each location, and that this apportionment should be fair and reasonable.
It is possible for a higher amount to be paid free of tax and NICs if the business can provide evidence that the cost per mile to the employee was higher than the 14p rate. However, any mileage payment in excess of the AFRs that cannot be supported by this evidence will be liable to tax and NICs.
Important clarifications
AFRs are not relevant to any employees who use their personal EV for business travel. They are also not relevant if your employees are reimbursed for the actual cost of charging their EV company cars regardless of personal or business miles, as is allowed by the rules.
We’re here to help
If you have any questions regarding the updated Advisory Fuel Rates for electric company cars, or are interested in switching your business fleet to electric vehicles, please get in touch with a member of our specialist Employment Tax team or speak to your usual Azets adviser.