HMRC Introduces New Advisory Fuel Rates for Electric Vehicles
- Nick Jenkins
- Dec 2, 2025
- 2 min read
What employers and employees need to know from 1 September 2025
HMRC’s latest update to Advisory Fuel Rates (AFRs), effective 1 September 2025, introduces an important change for electric vehicle (EV) users. For the first time, there are now two separate rates for fully electric company cars—reflecting the difference between charging at home and using public charging networks.
New electric vehicle rates
From 1 September 2025, the AFRs for fully electric vehicles are:
8p per mile – where the vehicle is charged at home
14p per mile – where the vehicle is charged using public charge points
This distinction recognises the higher cost of public charging and ensures employees are reimbursed fairly for business mileage.
What are AFRs used for?
AFRs serve several important purposes:
Employer reimbursement: To repay employees for business travel fuel costs in company cars.
VAT calculations: Businesses use AFRs to work out the recoverable VAT on fuel for business journeys.
Employee repayments: Employees can also use AFRs to reimburse employers for private fuel they have used.
AFRs are reviewed quarterly, so it’s essential for employers to stay up to date.
Key updates from HMRC
HMRC has also clarified how the new rates should be applied:
1. Higher rates can be used if costs exceed the AFR
If an employee uses a public charger and the actual cost per mile is higher than 14p, a higher reimbursement rate may be used—provided the cost can be clearly evidenced.
2. EV charging can be apportioned
Where a company car is charged both at home and at public charge points, mileage can be apportioned between the two rates.
The apportionment must be fair and reasonable.
Employers should keep clear records showing how they reached the split.
What should employers do now?
Update policies relating to EV reimbursement.
Make sure payroll and HR teams are aware of the dual-rate system.
Ensure employees understand what evidence is needed for higher-cost public charging claims.
Review mileage logs to make sure charging methods are recorded accurately.
If you need support updating your mileage policies or understanding how the new rates affect your business, the SJC, Chartered Accountants, team is here to help.
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