New two-tier mileage rates for electric vehicles

The amount that employers can reimburse staff for business travel in company cars changes from 1 September 2025. What are the new rates, and why is this update different to previous ones?

New two-tier mileage rates for electric vehicles

Advisory fuel rates for company cars are updated by HMRC on a quarterly basis due to fluctuations in fuel prices. The rates determine the amount that can be paid to an employee using a company car for business mileage, or where an employee has to reimburse their employer for private journeys. Where HMRC’s rates are used, there are no income tax consequences for the employee. HMRC has now published the advisory rates applicable from 1 September 2025. The rate per mile will be:

Engine size Petrol LPG
1,400cc or less 12p 11p
1,401cc to 2,000cc 14p 13p
Over 2,000cc 22p 21p
     
     
     
     

 

Engine size Diesel
1,600cc or less 12p
1,601cc to 2,000cc 13p
Over 2,000cc 18p
   
   
   
   

 

The big difference this time is the introduction of a second electricity rate for fully electric cars. For 1 September, the two rates will be:

  • 8 pence per mile for home charging
  • 12 pence per mile for public charging

 

Related Topics