HMRC has updated the Advisory Fuel Rates (AFRs) for electric vehicles, and from 1 September there are now two separate rates depending on where the vehicle is charged:
- 8p per mile – when the company car is charged at home
- 14p per mile – when the company car is charged using public charging points
AFRs are reviewed quarterly and help employers reimburse employees for the cost of business travel in company cars. They are also used to calculate the VAT element of business fuel and allow employees to repay their employer for private fuel usage.
These changes reflect the rising cost differences between home charging and public charging, and HMRC has now updated its guidance to give employers and employees greater flexibility.
Key updates in HMRC’s AFR guidance
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Higher rates can be used where costs exceed the AFR
If the cost per mile using a public charger is higher than 14p per mile, employers or employees may use a higher rate.
They must be able to show evidence of the true cost per mile.
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Apportionment allowed for mixed charging
For journeys where a company car is charged both at home and at public chargers, mileage can be split to reflect the proportion of charging at each location.
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Apportionment must be fair and reasonable
HMRC expects a clear and logical method.
This could be based on recorded charging data, mileage logs, or typical patterns of use.
How we can help
Electric vehicle use is increasing, and AFR rules can become complicated quickly, particularly where:
- different charging methods are involved,
- businesses need to calculate VAT correctly, or
- employees repay an employer for private mileage.
Our team at Beavis Morgan can review your position, ensure your approach is compliant, and help you use the rates in the most efficient way for your circumstances.
We can also look ahead and support you with wider planning, including retirement, wealth, and inheritance tax considerations.
For more information or to discuss your tax affairs in detail, contact your usual Beavis Morgan Partner or email info@beavismorgan.com.
