The AER for electric vehicles had not changed since 2018, this uplift is seen as a positive move towards providing a supportive environment for the push to zero emission motoring.”

Paul Hollick, AFP chair, said the previous 4ppm rate which generally failed to cover reimbursement of fuel costs when most individuals are now paying closer to an estimated 18p per kwh even when charging at home.

He added: “We very much welcome this move by HMRC. In truth, 5ppm is probably still too low – recent research among our members saw 6-7ppm mentioned as an appropriate rate – but it does represent an increase of 25% in one step, which is quite substantial.

“Importantly, it establishes the principle of revisiting and revising the AER rate as part of conversations between industry bodies and HMRC, which is an important development.”

Petrol and diesel pence per mile (PPM) rates, as well as all three LPG rates, for all three engine-size ranges have been increased to reflect the rising fuel prices.

The diesel rate for company cars with a engine size of more than 2,000cc increases by 1ppm, from 15ppm to 16ppm. The Advisory Fuel Rates for diesel cars up to 1,600cc and from 1,601-2,000cc also increased by 1ppm, to 11ppm and 13ppm respectively.

For petrol company cars, all three rates have all increased, with the AFR rates for vehicles up to 1,400cc and with an engine of 1,401-2,000cc up by 1ppm, to 13ppm and 15ppm respectively. Petrol company cars with an engine more than 2,000cc have increased by 2ppm, from 20ppm to the new rate of 22ppm.

All fuel rates have also increased for LPG-powered vehicles. The new LPG reimbursement rate for vehicles up to 1,400cc is 9ppm, up from 7ppm, and 10ppm for vehicles with an engine size of 1,401-2,000cc, up from 8ppm. The AFR rate for LPG vehicles with an engine greater than 2,000cc increases by 3ppm, from 12ppm to 15ppm.

Hybrids are treated as either petrol or diesel cars.