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Navigating HMRCs two-tier Advisory Electric Rate for EVs

3 min to readElectric vehicles
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What UK Fleet Managers need to know

Guest blog from Tash Turner, Specialist Consultant, Ayvens UK

From 1 September 2025, HM Revenue & Customs (HMRC) implemented a new two-tier Advisory Electric Rate (AER) for company-owned electric vehicles (EVs), distinguishing reimbursement rates based on drivers’ access to home charging facilities:

This replaces the previous flat rate of 7 pence per mile that applied regardless of charging location.

Understanding the two-tier AER: Eligibility matters

HMRC’s intent is clear: the two-tier system is designed to differentiate between distinct types of EV drivers, not to allow drivers with home charging access to claim the higher 14p/mile rate when occasionally using public fast, rapid, or ultra-rapid chargers.

This means, for example, a driver eligible for the 8 pence per mile home charging rate should not claim 14 pence per mile simply because they used a public rapid charger on a particular trip. The higher rate is reserved for those without home charging options who must rely on public charging facilities regularly, often at higher cost.

What this means for fleet managers

The new guidance clarifies that the two-tier system is both driver- and trip-specific:

This represents a shift from earlier interpretations that strictly limited the 14p rate to drivers without home charging access. Now, HMRC acknowledges the practical reality that many drivers use mixed charging methods and allows splitting mileage claims, provided there is sufficient proof.

Practical challenges and implications

Operational burden shifts to policy design and driver communication

Instead of seeking to reconcile detailed charging session logs with mileage, fleets should focus on verifying home charger access, establishing consistent reimbursement frameworks, and ensuring drivers understand the rules to avoid errors and disputes.

Key takeaways for fleet managers

The two-tier Advisory Electric Rate is a progressive step toward fairer reimbursement reflecting true EV running costs. However, fleets must prepare for increased data and compliance complexity as reimbursement becomes more evidence based. By focusing on clear policies, robust record-keeping, and driver engagement, fleet managers can successfully navigate this evolving landscape, controlling costs while maintaining compliance.

Published at 9 October 2025
9 October 2025
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