LeasePlan has expressed concern over a lack of change to the Advisory Electricity Rate, which it says will leave EV drivers significantly shortchanged as energy prices continue to soar.

The average EV will now cost around 9-10p per mile following the latest energy price rises – in effect, double the Advisory Electricity Rate

HMRC published new Advisory Fuel Rates yesterday (25 May 2022), introducing rises for all petrol and diesel engine sizes, ranging from 1ppm to 3ppm. But the Advisory Electricity Rate (AER) for reimbursing electric company car mileage remains at 5ppm, following the 25% increase from 4ppm in the 1 December 2021 rate. That’s despite rocketing energy prices.

LeasePlan’s head of consultancy services Matthew Walters said he would have expected the AFRs for petrol and diesel vehicles to have increased by more than 2p and 3pm per mile respectively.

But he said the company was most surprised to learn that there has been no change at all to electric vehicle rates.

“With home energy having increased to 27p per kwh since the last change in December 2021, the average EV will now cost around 9-10p per mile – so, in effect, double the advised rate. This increases to around 12-14p per mile when you add network charging into the mix.

“Our concern is that the Government’s revised Advisory Fuel Rates will leave all drivers out of pocket, as they don’t accurately reflect the cost at the pump or the plug,” he added.

“Of course, HMRC guidance states that you can either pay Advisory Fuel Rates or pay based on ‘Actual Costs’. However, no guidance is or will be given as to what methodologies will be recognised when calculating these costs. Furthermore, calculating the Actual Costs for an EV is often a complex process due to the mix of home energy and public charging and the different VAT rates involved.”

Regardless of the challenges, Walters said fleets would need to review their reimbursement policies, given this “missed opportunity”.

“We’d recommend that they speak to their leasing partners, who should be able to advise them on established methods,” he finished.