The Association of Fleet Professionals and the BVRLA have joined forces to call upon Government to take steps to ensure that the Advisory Electricity Rate (AER) for electric vehicles is fit-for-purpose.
The industry bodies share concerns that the current 4 pence per mile rate, which remains unchanged since 2018, is no longer reflective of real-world conditions, and have written to HMRC to make the following recommendations:
- Review the current AER level
- Establish an ongoing review process for the AER
- Create a separate AER for vans
- Begin work on a hydrogen AFR
Advisory Rates are widely used by employers to determine reimbursement rates for employees claiming business mileage, with HMRC publishing updated AFRs quarterly for petrol, diesel, and hybrid vehicles.
Paul Hollick, chair at the AFP, explained: “The HMRC’s current rate was set at a time when business use of EVs was in its infancy and is quite a blunt instrument, using the same rate whether for a small city runabout or a large luxury 4x4. Clearly, the fuel costs of these vehicles are not the same.
“The Advisory Fuel Rates (AFRs) used for petrol, diesel and hybrid vehicles recognise that there are different engine sizes that have different fuelling costs. A similar approach needs to be adopted for their electric equivalents.”
BVRLA Chief Executive, Gerry Keaney said: “The current AER rate and the process for determining it is not fit-for-purpose. It has the potential to compromise the uptake of electric vehicles, as employees will not, in many cases, be adequately reimbursed for their business travel costs.
“A fifth of BVRLA members’ fleet already has some form of electrification and this figure is only set to increase as more people look to upgrade to cleaner vehicles. The tax system must catch up and reform of the AER process is needed to ensure parity with the fairer process applied to AFRs.”
The Association of Fleet Professionals and the BVRLA will continue to work together on this issue to ensure that the voice of the fleet industry is heard amongst policymakers.
Notes to editors:
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About the BVRLA
The BVRLA represents over 970 companies engaged in vehicle rental, leasing and fleet management. Our membership is responsible for a combined fleet of four million cars, vans and trucks – one-in-ten of all vehicles on UK roads.
BVRLA members represent the demand-side of the automotive industry, buying around 50% of new vehicles, including over 80% of those manufactured and sold in the UK. In doing so, they support almost 500,000 jobs, add £7.6bn in tax revenues and contribute £49bn to the UK economy each year.
Together with our members, the association works with policymakers, public sector agencies, regulators, and other key stakeholders to ensure that road transport delivers environmental, social and economic benefits to everyone. BVRLA members are leading the charge to decarbonise road transport and are set to register 400,000 new battery electric cars and vans per year by 2025.
BVRLA membership provides customers with the reassurance that the company they are dealing with adheres to the highest standards of professionalism and fairness.
The association achieves this by reinforcing industry standards and regulatory compliance via its mandatory Codes of Conduct, inspection regime, government-approved Alternative Dispute Resolution service and an extensive range of learning and development programmes.
About the Association of Fleet Professionals
The Association of Fleet Professionals is the organisation for fleet professionals.
It brings together ACFO, a non-profit making organisation representing the interests of businesses which operate cars and vans as part of their normal commercial activities; and ICFM (the Institute of Car Fleet Management), the UK’s only independent not-for-profit organisation dedicated to furthering the education, recognising the achievements, and advancing the profession of car and light commercial fleet management.