HM Revenue and Customs (HMRC) has announced the latest updates to the Advisory Electric Rate (AER) that will affect employees using a company car.
Reviewed every three months on a quarterly cycle, HMRC’s latest update confirmed there are now two rates for home charging (eight pence a mile) and public charging (14 pence a mile).
Why does HMRC change the AER rate?
The purpose of regularly updating the AER rate is to reflect the different costs of charging electric vehicles.
They calculate the home rate based on the average domestic electricity price of 27.04pk/Wh and an efficiency of 3.59 miles per kWh.
The public rate has followed the same principle, but starts at a cost of 51pk/Wh.
The regular updates provide clarity for both employers and employees, while also making rates fair for both types of charging.
Why does the AER rate matter for businesses?
The AER rate is applicable for employees using company cars, to enable them to be reimbursed where they pay for the cost of charging their company electric car. It can also be used where the company pays for the cost of charging the car, but the employee reimburses the cost of electricity used for private travel.
Need support calculating the costs?
With the rates regularly changing, you may need assistance to work out the costs.
