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THE Government needs to revise its Advisory Electricity Rate (AER) for electric vehicles which has remained unchanged since 2018.

Advisory Rates are widely used by employers to determine reimbursement rates for employees claiming business mileage, with HMRC publishing updated AFRs quarterly for petrol, diesel, and hybrid vehicles.

However, the Association of Fleet Professionals said that the current AER rate is not fit for purpose and is  no longer reflective of real-world conditions. It has written to HMRC asking it to:

  • Review the current AER level
  • Establish an ongoing review process for the AER
  • Create a separate AER for vans
  • Begin work on a hydrogen AFR

Paul Hollick, chair at the AFP, said: “The HMRC’s current rate was set at a time when business use of EVs was in its infancy and is quite a blunt instrument, using the same rate whether for a small city runabout or a large luxury 4×4. Clearly, the fuel costs of these vehicles are not the same.

“The Advisory Fuel Rates (AFRs) used for petrol, diesel and hybrid vehicles recognise that there are different engine sizes that have different fuelling costs. A similar approach needs to be adopted for their electric equivalents.”

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