A 25% increase in the Advisory Electricity Rate (AER) for reimbursing electric company car mileage has been greeted as a win for fleets by the Association of Fleet Professionals (AFP) and British Vehicle Rental and Leasing Association (BVRLA).

The Advisory Electricity Rate for reimbursing company car electric mileage now stands at 5ppm; the first increase since it launched in 2018

The increase means the AER, first introduced in 2018 at 4ppm, now rises to 5ppm, helping to ensure fairer compensation for drivers charging electric vehicles.

The move follows intensive conversations with HMRC by the two trade organisations, which had long said the previous AER was leaving drivers out of pocket and was not “fit for purpose”. Due to major energy price rises, most individuals are now paying closer to an estimated 18 pence per kwh, even when charging at home.

Paul Hollick, AFP chair, said: “We very much welcome this move by HMRC. In truth, 5ppm is probably still too low – recent research among our members saw 6-7ppm mentioned as an appropriate rate – but it does represent an increase of 25% in one step, which is quite substantial.

“Importantly, it establishes the principle of revisiting and revising the AER rate as part of conversations between industry bodies and HMRC, which is an important development.”

Latest AFP and Nissan research revealed today had found that nine out of 10 (91%) fleet operators said the old AER for electric vehicles needed revising, in particular to encourage home charging.

The BVRLA also applauded the AER rise. chief executive Gerry Keaney added: “The EV market is maturing and is no longer a niche. We need a mileage recompense rate that can adapt to energy prices and charging trends, so we are pleased to see HMRC respond so swiftly to the lobbying from AFP and BVRLA.

“The AER for electric vehicles had not changed since 2018, this uplift is a positive move and shows that the Government is serious about providing a supportive environment for the push to zero-emission motoring.”