HMRC clarifies apportionment calculations for electric car mileage

Sara White, Editor, Business & Accountancy Daily - Croner-i

HMRC has updated the advisory fuel rates to reflect the decision to create different electric fuel rates for home and public charging, and how to split costs.

The new guidance describes how to apportion the mileage for electric cars between public and residential locations.

For journeys where a company car is charged at both public and residential locations, companies can apportion the mileage based on how much charging happens at each place.

‘The apportionment calculation should be fair and reasonable,’ HMRC stressed.

From 1 September 2025 the advisory electric rates for fully electric cars were split into two bands, creating a new higher non-residential rate as follows, which replaced the previous standard rate of 7 pence per mile.

The new electric rates are:

• 8 pence per mile for home charging; and

• 14 pence per mile for public charging.

A higher amount than the advisory rates can be used as long as businesses can show that the fuel cost per mile is higher, HMRC stated in the updated advisory fuel rates guidance.

This means that if the public charger used is higher in cost per mile than the new advisory rate introduced for public charging, a higher rate can be used as long as the business can show the cost per mile is higher.

HMRC non-residential charging rates are based on the ‘slow or fast public charge cost per kilowatt-hour’ using the Zapmap public charging price index monthly published figure for slow or fast chargers (charging speed less than 50 kilowatts), updated with the latest estimate of electricity prices from the Office for National Statistics.

This rate does not take into account the more powerful high speed chargers now being rolled out more widely across the country.

The advisory fuel rates only apply in the following circumstances, when companies:

• reimburse employees for business travel in their company cars; or

• require employees to repay the cost of fuel used for private travel.

These rates cannot be used in any other circumstances. If the rates are used, it is not necessary to apply for a dispensation to cover the payments made.

Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.