New Advisory Fuel Rates Shake Up Electric Vehicle Reimbursements in the UK
Updated 26 August 2025 – HM Revenue & Customs (HMRC) has unveiled significant updates to the Advisory Fuel Rates (AFRs) for company car users, effective from 1 September 2025. The most notable change introduces a groundbreaking split for electric vehicle (EV) charging, distinguishing between home and public rates, marking a shift to better reflect real-world costs. This adjustment, detailed in the latest GOV.UK guidance updated today, aims to streamline tax-free reimbursements for employees while addressing the rising costs of public charging networks.
For the first time, EVs will have two advisory electric rates: 8 pence per mile for home charging and 14 pence per mile for public charging. This dual-rate system, informed by data from the Department for Energy Security and Net Zero, Office for National Statistics (ONS), and Zapmap’s public charging index, acknowledges the disparity between domestic electricity costs (around 27p per kWh) and public charging rates (averaging 51p per kWh for slow/fast chargers under 50kW). The home rate, based on an efficiency of 3.59 miles per kWh, remains stable, while the public rate caters to higher costs faced by employees reliant on roadside chargers.
This change comes alongside minor tweaks to petrol, diesel, and liquefied petroleum gas (LPG) rates. Petrol rates hold steady at 12p (up to 1400cc), 14p (1401-2000cc), and 22p (over 2000cc), while diesel sees slight increases to 12p (up to 1600cc), 13p (1601-2000cc), and 18p (over 2000cc) from 11p, 13p, and 17p respectively. LPG rates rise marginally to 11p (up to 1400cc), 13p (1401-2000cc), and 21p (over 2000cc). These adjustments, calculated using mean miles per gallon from manufacturer data and latest fuel prices from the Department for Energy Security and Net Zero, reflect stabilising fuel costs.
The EV split offers flexibility but requires diligence. Employers can reimburse at the higher public rate if supported by evidence, such as receipts, avoiding taxable benefits if costs exceed 14p per mile. Employees must track charging locations, with the transitional period allowing the previous 7p rate until 30 September 2025. This move supports the UK’s EV adoption, though some critics note the public rate may undervalue rapid charging costs (up to 70p/kWh on motorways).
For businesses, updating payroll and expense policies by 1 September is crucial to comply with HMRC’s rules, ensuring tax- and NI-free reimbursements. The change highlights the growing complexity of EV ownership, balancing cost efficiency with administrative ease. As electric vehicle use surges, this split could set a precedent for future rate refinements, potentially influencing company car schemes nationwide.
For the full rate tables and calculation methods, visit GOV.UK. Advisory fuel rates - GOV.UK
With electric rates now mirroring diverse charging realities, the update underscores HMRC’s effort to keep pace with evolving transport trends.
