Earlier this year, HM Revenue and Customs (HMRC) issued a separate 14p Advisory Electric Rate (AER) for public charging (and 8p AER for home charging) of EVs used for business travel.
The interpretation of how to apply the new rate has been causing confusion. Yesterday, HMRC updated its guidance. It also plans to issue a worked example in the October Employer's Bulletin.
Key takeaways for members, quoted from the guidance page are:
“For journeys where a company car is charged at both public and residential locations, you can apportion the mileage based on how much charging happens at each place. The apportionment calculation should be fair and reasonable.”
“A higher amount than the advisory rates can be used as long as you can show that the fuel cost per mile is higher. Therefore, if the public charger used is higher in cost per mile than the new advisory rate introduced for public charging, a higher rate can be used as long as you can show the cost per mile is higher.”
“Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.”
There should now be more clarity for members on how to apply the rates.
It is worth noting that these rates are advisory only. As stated in the quote above, higher rates can be used if appropriately evidenced.
Most importantly, being able to use a fair and reasonable apportionment provides the clarity that employers need.
This is a step towards Government recognising the disparity that exists between the costs of home and public charging. This is something that the BVRLA and others, including the Association of Fleet Professionals (AFP), have been raising on an on-going basis.
Members are asked to share any positive feedback with [email protected] so that the association can relay this to HMRC and let them know that whilst more needs to be done, efforts so far are appreciated.
