Changes to the Advisory Electricity Rate explained

From the 1^st September 2025, HMRC has updated the Advisory Electricity Rate (AER) for electric vehicles that are used for business travel, introducing separate reimbursement rates for home and public charging for the first time.

AER is a calculation of how much electricity is used per mile of driving an EV, and how much should be repaid to you when you drive it on company business.

Until now, a single rate of 7p per mile (ppm) applied regardless of how or where drivers charged. Many drivers felt this was unfair as it didn’t reflect the higher rates charged by public chargepoints and meant drivers could be out of pocket.

Under the new structure, the rates to claim mileage back on is now aligned more closely to real-world electricity prices:

For those who use a home charger: The AER – is now 8ppm, which reflects a typical domestic energy cost per kWh – which is 27p.

For those who use public chargers: As this is more expensive than home chargers, the new AER is now 14ppm, calculated on 51p per kWh, using Zapmap’s index for chargers up to 50kW combined with ONS (Office for National Statistics) data.

Both figures are derived from an assumed average vehicle efficiency of 3.59 miles per kWh, which has been calculated from averages from UK EV sales.

It’s worth noting that these rates don’t entirely cover rapid and ultra-rapid charging (100kW+) which typically cost around 80p per kWh of electricity. So it’s worth drivers checking whether they really do need a full high-speed charge, or whether something a little slower (and cheaper!) might be better for them Further adjustments to the policy might still be on their way as we’re still waiting for some information to be published by HMRC.

Alongside the EV update, HMRC has also confirmed changes to Advisory Fuel Rates for hybrid, petrol and diesel cars:

• Hybrids: continue to follow petrol or diesel equivalents
• Diesel cars up to 1,600cc: 11ppm to 12ppm
• Diesel cars above 2,000cc: 17ppm to 18ppm
• Diesel cars 1,601cc–2,000cc: unchanged at 13ppm

These updates shows that HMRC is keeping pace with the real costs of motoring. For salary sacrifice drivers without home charging access, it ensures business mileage rates now better reflect the reality of public charging costs. The update only strengthens the case for making the switch to an EV, particularly when EVs are charged at home.