An increasing number of electric cars are being launched into the market and HM Revenue and Customs has yet to officially clarify both Advisory Fuel Rates and Approved Mileage Allowance Payments. 

Advisory Fuel Rates apply where employers reimburse employees for business travel in their company cars or require employees to repay the cost of fuel for private travel. Set quarterly, the pence per mile figure is linked to the engine size of the car with different rates applicable for petrol, diesel and LPG models.

Approved Mileage Allowance Payments are paid to employees who drive their own cars on business. In 2012/13 the tax-free pence per mile figure us 45p for the first 10,000 business miles and 25p for each subsequent mile.

ACFO chairman, Julie Jenner (Inset) said: 'HM Revenue and Customs originally indicated that the AMAP rate would apply. However, that figure bears no reality to either the cost of the fuel or the whole life cost of the vehicle. The tax office must also take into account where vehicles are recharged – at the drivers’ home or place of work.

'ACFO has a close relationship with HM Revenue and Customs and dialogue is continuing with officials over what the reimbursement rates for electric cars should be. Tax officials are undertaking financial modelling to ascertain what a fair pence per mile rate is in respect of both Advisory Fuel Rates and Approved Mileage Allowance Payments,' she added.