Drivers using electric cars for work trips are still losing money on charging costs, despite a new HMRC system that splits reimbursement rates for home and public charging.
The tax authority recently introduced an Advisory Electricity Rate (AER) of 8p per mile for home charging and 14p per mile for public charging, replacing the previous single rate of 7p per mile.
The change is intended to reflect the different costs of charging at home compared with using public infrastructure.
However, according to analysis by salary sacrifice provider loveelectric, rapid charging typically costs between 15p and 23p per mile, with some ultra-rapid networks reaching the top of that range.
That means employees who depend on rapid chargers for business trips are still covering the shortfall themselves.
Steve Tigar, chief executive of loveelectric, said: “HMRC’s decision to split the Advisory Electricity Rate is a step in the right direction, but it still misses the mark in some important areas. Most notably, it does not account for the high cost of rapid charging.
“For employees who need to rely on rapid chargers during business trips, the 14p per mile allowance falls far short of the true cost.”
He warned the shortfall could push drivers to use slower, cheaper charge points to avoid being out of pocket, extending journey times unnecessarily.
He added: “That is a direct hit to productivity and creates an unnecessary cost for employers who are already managing tight margins.”
At the other end of the scale, home charging can cost as little as 2p per mile, meaning some drivers may receive up to four times the amount they have actually spent.
Loveelectric said this creates a potential tax compliance risk for both employers and employees.
To address the imbalance, the company launched the loveelectric Charge Card, which tracks real charging costs and reimburses drivers to the penny.
Tigar said: “With the Charge Card, employees’ business mileage is reimbursed to the exact amount spent. It is fair for them and efficient for employers.”
The product also includes a model designed to reduce the cost of personal mileage by up to 62%, using a HMRC-compliant salary sacrifice agreement to cover charging costs for private trips.
Loveelectric added that failing to reimburse drivers accurately could hold back EV adoption rates, particularly in workplaces trying to hit their sustainability targets.
