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Company Car Benefits & Tax

AER change is progress, but leaves business drivers out – loveelectric

The rates represent a 100% increase on the previous flat rate of seven pence per mile for public charging.

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Electric car charging cable plugged into vehicle charging port with alloy wheel visible.
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HMRC’s decision to split the Advisory Electricity Rate (AER) into separate bands for home and public electric vehicle (EV) charging marks progress, but leaves employees subsidising business travel, according to loveelectric CEO Steve Tigar.

The rates – 8p per mile for home charging and 14p per mile for public charging – represent a 100% increase on the previous flat rate of 7p per mile for public charging.

However, analysis showed rapid charging typically costs between 15p to 23p per mile, with some networks charging as much as 23p per mile for ultra-rapid charging.

Steve Tigar, CEO of loveelectric, said: “HMRC’s decision to split the Advisory Electricity Rate is a step in the right direction, but it still misses the mark in some important areas.

“Most notably, it does not account for the high cost of rapid charging. For employees who need to rely on rapid chargers during business trips, the 14p per mile allowance falls far short of the true cost.”

Tigar warned that the rate gap could have unintended consequences for business efficiency.

He added: “This could unintentionally push employees to detour to slower, cheaper charge points to avoid being out of pocket, which results in more time spent charging on company time.

“That is a direct hit to productivity and creates an unnecessary cost for employers who are already managing tight margins.”

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The analysis also highlighted an imbalance at the other end of the spectrum, where employees charging at home may pay as little as 2p per mile while receiving 8p per mile reimbursement – potentially four times the actual cost, creating a potential tax compliance issue.

loveelectric’s Charge Card aims to offer an alternative approach that addresses both employee fairness and employer efficiency.

The solution is designed to track actual charging costs and reimburse employees to the exact amount spent, eliminating both underpayment and overpayment scenarios.

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Tigar said: “With the Charge Card, employees’ business mileage is reimbursed to the penny. It is fair for them and efficient for employers.”

The loveelectric Charge Card also includes a model that intends to save employees up to 62% on the cost of their personal mileage, as drivers set up a standalone HMRC compliant salary sacrifice agreement to cover the charging costs for their personal trips.

loveelectric said the charging cost gap presents particular challenges for organisations with sustainability commitments.

When employees face out-of-pocket expenses for EV charging, loveelectric also said it can slow adoption rates and undermine fleet electrification targets that are critical to achieving Scope 3 emissions reductions.

The loveelectric Charge Card integrates with existing EV salary sacrifice schemes and company car programmes, designed to allow employers to address the reimbursement gap without changing current providers or administrative processes.

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