HMRC Advisory Fuel Rates: Key Update from 1 September 2025

From 1 September 2025, HMRC has for the first time introduced two distinct mileage reimbursement rates for fully electric company vehicles—separating home charging from public charging. This marks a significant shift in accounting for real-world cost differences.

What’s New for Electric Vehicles?

• Home charging rate: 8 pence per mile (previously a flat 7 pence)

• Public charging rate: 14 pence per mile—a newly introduced rate that replaces the single‑rate approach of 7 pence per mile for both contexts

HMRC originally planned a public charging rate of 12 pence per mile but adjusted to 14 pence after industry feedback pointed out it undervalued real costs  .

Why the Split?

This change reflects actual cost differences:

• Home charging is based on average domestic electricity costs (around 27 pence/kWh) and typical EV efficiency (3.59 miles per kWh)  .

• Public charging uses the same efficiency but assumes a higher average cost of ~51 pence/kWh, from slow or fast (≤50 kW) chargers using Zapmap data  .

Though the public rate still doesn’t cover ultra‑rapid charging costs, typically around 80 pence/kWh or more, employers may reimburse at higher rates if they can demonstrate actual costs exceed the advisory rates  .

What Else Changed This Quarter?

• Petrol and LPG rates remain unchanged.

• Diesel rates have increased by 1 pence per mile for engines up to 1,600cc and over 2,000cc; the mid-range (1,601–2,000cc) remains the same  .

What It Means for Employers and Fleet Managers

1. Update reimbursement policies to distinguish between home and public charging.

2. Educate EV drivers to track their charging location for reimbursement accuracy.

3. Consider ultra‑rapid charging impact: For employees using ultra‑rapid chargers, rate adjustments may be needed—if backed by actual cost data.

4. Stay compliant: Use HMRC’s advisory rates to ensure tax‑free reimbursement. If reimbursement exceeds those rates, be prepared to justify them with evidence  .

5. Automated tracking tools can simplify recording where charging happened—crucial for accurate claims and audit readiness.

Bottom Line

This update is a progressive move by HMRC toward fairer, cost-reflective mileage reimbursement for EVs. By differentiating between home and public charging, it helps align policy with driver experience, while maintaining flexibility for higher reimbursement where justified.

Need help adjusting your internal mileage systems or crafting employee communications to match these new rates? Just let me know!

All figures and rules sourced from HMRC’s latest Advisory Fuel Rates guidance and supported by expert commentary from Fleet News and other specialist outlets.