HMRC Splits Advisory Rates: What Employers and Drivers Need to Know
From 1 September 2025, HMRC will introduce new electric car mileage rates for company vehicles. For the first time, separate rates will apply depending on whether charging is done at home or through a public charging network.
These updated electric car mileage rates affect how employers reimburse business mileage in fully electric company cars. They also apply when employees repay the cost of electricity used for personal journeys.
What’s Changing in the Electric Car Mileage Rates?
Previously, HMRC offered a flat rate of 7p per mile, regardless of where the vehicle was charged. This approach often led to shortfalls for employees using higher-cost public chargers.
From 1 September 2025, two distinct electric car mileage rates will apply:
- 8p per mile – home charging
- 12p per mile – public charging
The 7p rate can still be used until 30 September, but from 1 October, only the new rates will apply. The 12p rate is based on average costs for slow or fast chargers, but it may not cover ultra-fast charging, which tends to cost more.
What If Public Charging Costs More?
If the cost per mile exceeds 12p, for example, with ultra-fast charging, employers can still reimburse the higher amount, provided there is evidence. If the rate is reasonable and supported by documentation, there are no tax or National Insurance consequences.
You can read HMRC’s official advisory fuel rates guidance here.
Record-Keeping for New Mileage Rates
The updated electric car mileage rates mean businesses must now track more than just mileage. Employers also need to record how and where charging took place, whether at home or in public.
This requirement adds some complexity, particularly for companies with multiple vehicles or remote staff.
What About Hybrid Vehicles?
The change applies only to fully electric vehicles. Hybrid cars will still be classed as petrol or diesel under HMRC rules.
Most fuel rates remain the same. However, two diesel bands have increased by 1p per mile from 1 September 2025.
If you’re unsure how to implement these new rules, we can help.
Whether you’re managing a fleet or reimbursing occasional business mileage, let’s get your policy up to speed.