HMRC to introduce Advisory Fuel Rate for pure electric cars

HMRC has bowed to campaigning from ACFO and will introduce an Advisory Fuel Rate (AFR) for 100% electric cars from September 1 at 4p per mile.

It will be published alongside AFR’s for petrol, diesel and LPG (liquefied petroleum gas) cars based on engine size. 

Plug-in hybrid and hybrid cars will continue to be treated as either petrol or diesel models for mileage reimbursement purposes.

AFR’s apply where employers reimburse employees for business travel in their company cars, or require employees to repay the cost of fuel used for private travel. They are deemed to be tax and National Insurance-free. AFR’s are reviewed quarterly and similarly, the new Advisory Electricity Rate will be kept under review.

For many years, ACFO has been calling on HMRC to publish official tax-free company car AFR’s for plug-in vehicles. It has been ACFO’s belief that the absence of defined mileage reimbursement rates was a handicap to some organisations including plug-in vehicles on their choice lists.

However, while delighted that HMRC has listened to the voice of the organisation and its members and introduced an AFR for 100% electric cars at the rate it recommended, ACFO chairman John Pryor, said: “We are disappointed that HMRC has not supported ACFO’s call for Advisory Electricity Rates to be introduced for plug-in hybrid petrol and diesel cars and range extended electric vehicles. Therefore, we will keep up the pressure on HMRC to introduce Rates for those vehicles.”