HMRC has announced (September 2025), that it is splitting the Electric Advisory Rate in two, and now provides a pence per mile figure for domestic charging, and one for public charging. But, as our AllCosts data for cars and vans shows, while the new rates go some way to addressing the issue that charging on the road is more expensive than plugging in at home, they could still leave drivers out of pocket and disgruntled, or businesses reimbursing more than they should. The new advisory rates are 8p per mile for business travel powered by home charging and 14p for public charging. The clue is in the name too: advisory. You can pay employees more (or less!) - if you can prove that a different rate is justified. Let’s apply these to what we know at Allstar, based on our AllCosts numbers, and the example of a typical electric executive car. We’ve created baskets of cars in each sector, collated their official lab-tested WLTP fuel economy or energy efficiency figures, and then applied a 20% ‘real life’ deduction to them, to replicate their efficiency more closely in everyday life. As a result, an average executive electric car runs at around 8p per mile, if the employee is powering it using an average home tariff of 24p per kWh. In that case the domestic AER is about right, although this doesn’t factor in the 5% VAT the business can reclaim. But we know, because we can see all tariffs of drivers using Allstar Chargepass, that some may be charging their vehicles on rates a third of that or less, or even double that. For example, if an employee charges their company car at 8p per kWh, their pence per mile figure will be less than 3p, and for 20,000 miles, the electricity used will total around £500, including 5% VAT (at 48p per kWh, the highest recorded tariff, the total would be more than £3,000). But if the employer reimburses at the AER of 8p per mile, they will be paying the driver £1,600 - effectively giving them around £1,000. The disparity with public charging is even greater. This executive car runs, using our real-world figures, at 21.6ppm using on-the-road charging at an average of 67p per kWh.

Over 20,000 miles at that rate, it costs (including 20% VAT, which could be reclaimed by the employer), about £4,320. Yet if the AER of 14ppm is applied, the driver will be reimbursed £2,800. In this case, an employer would have to have very loyal employees if they’re happy to subsidise their business travel to the tune of more than £1,000 a year after VAT. What these figures show is that the new AERs go some way to addressing the imbalance. But powering and paying for electric vehicles can be a complex business, and here we’ve not even gone into what would need to happen if the charging reimbursement requires a proportion of both domestic and public charging. Ultimately, it requires a more finely nuanced approach if it is to be fair and accurate for both employer and employee. The only way to be sure about the cost of driving electric vehicles for business is to pay for the specific amount of electricity used, at the exact tariff, at the point of delivery. This is what Allstar Chargepass does. To find out how we can do this for you, click here.