HMRC has cut its Advisory Electricity Rate for company car drivers used for claiming back charging costs from employers.

The new Advisory Electricity Rate reverses the 1ppm rise in the last quarter

The new AER is part of the latest advisory fuel rates, used for reimbursing employees’ costs while driving a company car on business, which are effective from 1 December 2023.

First launched in 2018 at 4ppm, the AER had risen to 5p in December 2022 and 8p on 1 March 2023 and was boosted to 10ppm from 1 September.

The new rate reverses the last rise. It comes on the back of falling electricity prices, but will fuel longstanding concerns that the AER leaves some drivers out of pocket.

Conversely, the official HMRC advisory fuel rates for the new quarter have gone up on the back of recent pump price rises. Changes include a 1p increase to 14ppm for cars with smaller petrol engines (1400cc or less) and a 1ppm rise for larger petrol-engined cars (over 2000cc) to 26ppm. All AFRs for diesel cars have gone up by 1ppm.

The increase in AFRs follows a four-month run on rising fuel prices, although latest RAC data shows the average price of petrol fell 2ppl at pumps in October while diesel fell 1ppl. However, the RAC has said that both fuels are still “seriously overpriced” at the pumps and has since welcomed the Government’s pledge to give the Competition and Markets Authority (CMA) regulator new powers to monitor the road fuel market, protecting drivers from “rip-off” fuel prices.

The new AFR tables are as follows (old rates in brackets):

The previous rates can be used for up to one month from the date the new rates apply. Hybrid cars are treated as either petrol or diesel cars for AFR purposes.

The full list of rates can be viewed here, along with the tables for calculating them.