HMRC has announced an important change to the way mileage rates work for fully electric company cars. From 1 September 2025, the current single advisory rate of 7p per mile will be abolished and replaced with two new rates, reflecting the different costs of charging at home compared to using public chargers.
What’s changing?
The new rates will be:
- 8p per mile – when charging at home
- 14p per mile – when charging at a public charging point
This means employees with a company-provided electric car will be reimbursed at different rates depending on where they charge, ensuring the system more closely reflects real-world costs.
Why has HMRC made this change?
Electric vehicle (EV) drivers have long argued that the flat rate of 7p per mile underestimates the true cost of public charging. By splitting the rate into home and public charging, HMRC recognises the higher cost of charging on the go.
It’s important to note, however, that these rates apply only to company cars. Employees using their own private vehicles for business mileage will continue to use the standard Approved Mileage Allowance Payments (AMAPs).
Additional details for employers and employees
- These new rates apply only to company cars, not privately owned vehicles.
- They can be used for reimbursing employees for business mileage or for employees repaying fuel costs for private mileage.
- The rates will be reviewed quarterly, in line with petrol and diesel advisory fuel rates.
- If the actual cost of public charging is higher than the HMRC advisory rate, a higher rate can be used, provided there is evidence to support it.
Don’t forget petrol and diesel rates
HMRC also publishes Advisory Fuel Rates (AFRs) each quarter for petrol, diesel and LPG company cars. These rates ensure fair reimbursement and prevent over- or under-paying employees.
The current rates (from 1 June 2025) are:
Petrol
- 1,400cc or less – 14p per mile
- 1,401cc to 2,000cc – 16p per mile
- Over 2,000cc – 26p per mile
Diesel
- 1,600cc or less – 13p per mile
- 1,601cc to 2,000cc – 15p per mile
- Over 2,000cc – 20p per mile
LPG
- 1,400cc or less – 11p per mile
- 1,401cc to 2,000cc – 13p per mile
- Over 2,000cc – 21p per mile
What does this mean for your business?
If your business provides company cars, whether electric or petrol/diesel, you should ensure your mileage reimbursement policies are up to date. From September 2025, you will need to use the correct EV rates, and we recommend reviewing your processes now so you are prepared.
Need more detail?
We have created a factsheet covering these changes in full, including easy-to-read tables of the current AFRs. This can be downloaded from our website, or requested by email.
If you would like us to review your company car policies or explain how these changes affect your business, please get in touch – we’re always happy to help.
Contact us today on 01204 381124
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