Fleet organisations call for AER review
10 June 2021
Author: Sean Keywood
The UK Government must act to ensure the Advisory Electricity Rate (AER) for EVs is fit for purpose, according to the Association of Fleet Professionals (AFP) and the BVRLA.
The organisations have written to HMRC about the current 4p-per-mile rate, which has remained unchanged since its introduction in 2018, saying it is no longer reflective of real-world conditions.
The AER is a counterpoint to the AFRs paid for combustion-engined company car mileage reimbursement.
As well as reviewing the current AER level, the AFP and BVRLA have also called for HMRC to establish an ongoing review process for the rate, create a separate AER for vans, and begin work on an AFR for hydrogen vehicles.
AFP chair Paul Hollick said: "The HMRC's current rate was set at a time when business use of EVs was in its infancy and is quite a blunt instrument, using the same rate whether for a small city runabout or a large luxury 4x4. Clearly, the fuel costs of these vehicles are not the same.
"The AFRs used for petrol, diesel and hybrid vehicles recognise that there are different engine sizes that have different fuelling costs. A similar approach needs to be adopted for their electric equivalents."
BVRLA chief executive Gerry Keaney said: "The current AER and the process for determining it is not fit-for-purpose. It has the potential to compromise the uptake of EVs, as employees will not, in many cases, be adequately reimbursed for their business travel costs.
"A fifth of BVRLA members' fleet already has some form of electrification and this figure is only set to increase as more people look to upgrade to cleaner vehicles.
"The tax system must catch up and reform of the AER process is needed to ensure parity with the fairer process applied to AFRs."