From 1 September 2025, HMRC introduced an update to mileage reimbursement rates for electric vehicles (EVs). For the first time, the Advisory Electric Rate (AER) now distinguishes between home charging and public charging, reflecting the real-world differences in cost for business drivers.
What’s changing?
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Home charging: 8p per mile (previously 7p)
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Public charging: 14p per mile (previously included in a flat 7p rate)
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Originally, HMRC set the public rate at 12p per mile but revised it to 14p following industry feedback that their calculations underestimated actual costs.
How HMRC calculated the rates
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Home charging is based on an average domestic electricity price of 27.04p/kWh and an efficiency of 3.59 miles per kWh, as published in HMRC’s advisory fuel rates guidance.
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Public charging uses the same efficiency figure but assumes a cost of 51p/kWh, taken from Zapmap’s national charging price index for slow and fast chargers under 50kW.
The real costs of ultra-rapid charging
HMRC’s new mileage rate for electric vehicles model stops short of recognising the price of ultra-rapid charging, which is often the default choice for fleets and business drivers. In practice, ultra-rapid charging typically costs around 80p/kWh or more.
At GRIDSERVE, our 79p-85p/kWh ultra-rapid charging reflects the value of getting drivers back on the road in minutes rather than hours. The speed and reliability of our Electric Hubs and Electric Forecourts® are critical for businesses, where time saved directly translates into productivity and reduced downtime.
This gap between HMRC’s allowance and the real cost of ultra-rapid charging highlights a challenge for reimbursement policies, but it also underscores the role of premium infrastructure like GRIDSERVE’s, which is designed to keep drivers moving quickly and efficiently.
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What it means for drivers and fleets?
The update provides greater transparency and fairness for both employers and employees.
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Home charging remains the cheapest option and continues to be slightly under-reimbursed.
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Public charging costs are better reflected, but the new rate still falls short for drivers relying on ultra-rapid networks.
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Fleet operators will need to update their mileage policies to reflect the two rates and ensure employees are reimbursed correctly.
Industry bodies, including the British Vehicle Rental and Leasing Association (BVRLA) have welcomed the change but continue to call for a third rate to cover ultra-rapid charging .
Wider policy context
The new rates also highlight ongoing issues in EV charging policy:
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VAT disparity: Home electricity is taxed at 5% VAT, but public charging attracts 20%. According to The Guardian, this adds an estimated £85 million in extra costs for drivers in 2025, rising to £315 million by 2030.
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Workplace charging benefits: Employers can claim capital allowances on workplace chargers, which can often pay back their investment in under 12 months through reduced mileage reimbursements.
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Fleet management pressure: Businesses covering millions of miles per year still face a gap between HMRC rates and real charging costs—particularly for time-sensitive operations relying on ultra-rapid networks
Why this matters for GRIDSERVE
At GRIDSERVE, we welcome HMRC’s move towards fairer reimbursement. However, we know the story doesn’t end here.
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Our Electric Hubs and Electric Forecourts® provide ultra-rapid charging, helping drivers get back on the road in minutes, not hours.
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While HMRC’s rates don’t yet fully reflect the cost of ultra-rapid charging, the time savings, reliability, and convenience of our network make it a vital choice for fleets and business drivers.
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We continue to work with partners, policymakers, and fleet managers to ensure EV drivers are supported with infrastructure that matches their needs.
Summary Table
| Charging Type | New Rate (p/mile) | Old Rate. | Typical Real-World Cost | Reimbursement Gap |
|---|---|---|---|---|
| Home charging | 8p | 7p | ~2–3p per mile | Slight overpay |
| Public charging | 14p | 7p | ~15–23p per mile | Under-reimbursed, especially at ultra-rapid |
Final word
The introduction of split EV mileage rates is a positive step from HMRC, but it’s only part of the solution. As EV adoption accelerates, business drivers and fleet managers need policies, and infrastructure, that keep pace with reality.
At GRIDSERVE, we’ll continue delivering the nationwide, ultra-reliable charging network businesses can depend on, while championing policies that make EV driving fair and cost-effective.
