HMRC has announced that the advisory fuel rate for fully electric cars will rise from 5 pence to 8 pence per mile from 1 December 2022.

The advisory electric rate will rise from 5 to 8ppm from 1 December

Today’s announcement follows repeated criticism from across the fleet sector that the Advisory Electricity Rate (AER) was short-changing drivers and stalling momentum on the switch to EVs.

The Government also announced today that the electric rate will be reviewed quarterly from 1 December 2022, in line with the practice for advisory fuel rates.

The AER was first introduced in 2018 at 4ppm and rose to 5ppm in November 2021. But many had called for it to be increased.

Research by Mina this summer found fleet car and van drivers reclaiming charging costs using the AER were being left out of pocket on nine out of 10 charges. Key finding in its ‘EV Report – Summer 22’, which looks at the June-August 22 quarter, found an average pence per mile (ppm) cost for an electric van if charged at home of 10ppm – double that of the former 5ppm AER, while cars charged at home cost 7ppm on average.

Since then, charging costs have hiked further under soaring energy prices.

The Treasury said the advisory electric rate for fully electric cars is calculated using electrical price data from:

• Department for Business, Energy & Industrial Strategy
• Office for National Statistics
• Electrical consumption rates from the Department for Transport

It takes into account annual sales to businesses (Fleet Audits average 2019 to 2021).

Advisory fuel rates for petrol,- diesel- and hybrid-fuelled vehicles from 1 December 2022 are still to be announced.

Paul Hollick, chair, AFP, commented: “We very much welcome this move, which has been made at least in part to our campaigning in conjunction with the BVRLA. An AER rate of 8ppm is much closer to real-world costs for the vast majority of electric vehicle drivers and will allow much fairer reimbursement – although it remains too low for both vans and all drivers who don’t have home charging.

“However, probably just as significant is the news that we will now see quarterly AER reviews in the same way as for AFRs, something that is clearly important at a time when energy and other EV running costs have been increasing rapidly.”