HMRC Slashes Electric Car Fuel Reimbursement Rates
Thousands of UK drivers face changes from June 1 as HM Revenue & Customs (HMRC) rolls out new fuel rates for company cars. This shake-up affects every type of vehicle: electric, diesel, hybrid, petrol, and LPG.
What Are Advisory Fuel Rates?
Darren Millar from BigWantsYourCar.com breaks it down: these are the rates employers use to pay employees for business travel fuel or reclaim money for private use. HMRC reviews these rates every quarter to keep them fair and compliant with tax rules, helping companies manage fuel costs efficiently.
New Rates Hit The Road
- Electric cars: Now reimbursed at 8p per mile — down 2p since December 2023.
- Petrol vehicles: Rates vary between 14p and 26p per mile depending on engine size.
- Diesel vehicles: Drivers get 13p to 20p per mile, again based on engine size.
- LPG cars: Between 11p and 21p per mile.
- Hybrids: Follow petrol or diesel rates according to their engine type.
This is the first time HMRC has introduced an advisory rate specifically for fully electric cars, signalling a major shift in how business mileage is reimbursed.
Driver Concerns and What’s Next
Many drivers are worried the 8p per mile for electric cars is too low and won’t cover actual costs. Experts say HMRC needs to rethink the Advisory Electric Rate to fairly compensate eco-conscious workers.
Millar urges employers and staff to update their reimbursement policies now to include the new electric rates and support greener travel choices.
The move shows HMRC’s determination to keep up with changing car tech and promote greener company fleets across the UK.
