From 1 September 2025, HMRC has updated its Advisory Fuel Rates – and this time, there’s an important change for electric vehicles.
Until now, electric company cars had a flat rate of 7p per mile, regardless of where the vehicle was charged. That’s no longer the case.
What’s Changing?
- Home charging: reimbursed at 8p per mile
- Public charging: reimbursed at 14p per mile
Employers can still use the old rate for September, but from 1 October 2025 the new split rates should apply.
Why the Split Matters
Not all charging is equal. Employees topping up at home usually pay a much lower electricity rate compared with those who need to rely on public charge points.
Home charging – HMRC’s 8p rate reflects the average cost of charging from a domestic tariff. For most drivers, this will cover their expenses fairly well.
Public charging – The 14p rate is designed to reflect the higher costs of using public chargers, where electricity prices can be more than double those at home.
Does 14p Really Cover Public Charging?
The 14p rate does a better job of reflecting everyday public charging costs than the old flat rate ever did. It’s roughly in line with the average price of using standard public chargers (typically under 50kW).
But there are two catches:
- Rapid and ultra-rapid charging can cost much more. Drivers using motorway service stations or high-speed charge points may find 14p doesn’t fully cover their costs.
- VAT differences – Home charging attracts 5% VAT, while public charging is hit with 20% VAT. That tax gap makes public charging noticeably more expensive in the real world.
What Employers Should Do
Update mileage policies – Make sure your payroll and expenses teams know the new split rates apply from 1 September (with a one-month transition).
Communicate with employees – Drivers need to know whether to claim at 8p or 14p depending on where they charge.
Be flexible – If an employee can show their real costs are higher than HMRC’s rate (for example, if they use ultra-rapid charging), you can reimburse more. Just make sure it’s reasonable and supported by evidence.
Who Can Use Advisory Fuel Rates
The rates can be used by employees with a company car. You can use them to:
- reimburse employees for business travel in their company cars
- ask an employee repay the cost of fuel used for private travel
What About Private Cars?
For employees claiming business mileage on their own private cars, the approved rates are:
Our View
This update is a step in the right direction. It recognises the gap between home and public charging costs and makes it fairer for employees driving electric company cars.
That said, the 14p rate still won’t always cover ultra-rapid charging. Employers may need to think carefully about what’s fair in practice, especially if staff have no option but to use pricier charge points.
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