Every quarter, HM Revenue and Customs (HMRC) reviews the Advisory Electric Rate (AER) and confirms the latest rates for individuals using a company electric car.
In the latest updates, HMRC announced two rates in place. One is the existing home charging rate and a new public charging rate.
For the next three months, the home charging rate will be at eight pence a mile and the public charging rate is 14 pence a mile.
Originally, placing the public charge at 12 pence a mile, HMRC changed the rate following various consultations, which didn’t feel the original figure reflected the cost differences between home and public charging.
What is the purpose of updating the AER rate?
The main purpose of quarterly reviews and updates of the AER rate is to ensure the rate reflects the costs of charging in different locations.
As home charging is generally cheaper, HMRC calculates a rate based on the average domestic price of electricity. They use the figure of 27.04 pk/Wh and use that alongside the efficiency score of 3.59 kWh to determine the rate and if indeed it does change.
They have followed a similar route to calculate the public rate but start at a base cost of 51 pk/Wh to reflect the higher costs of public charging.
The reviews from HMRC help both employers and employees. With clarity provided, it ensures the rates are fair and employees can work out the expense of using the vehicle as part of their job.
As the rates change regularly, it can be an awkward task attempting to work out the costs and if you need support with that, our team is here to help.
For help working out the costs, get in touch to see how we can help.
