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Fleet organisations welcome AER increase

Date: 24 November 2021   |   Author: Sean Keywood

A newly-announced increase in the advisory electricity rate (AER) by HMRC has been welcomed by the BVRLA and AFP.

The rate had stood at 4p per mile since its introduction in 2018, but alongside today's announcement of updated advisory fuel rates it has been increased to 5p, effective from 1 December.

The organisations had been campaigning for the increase, and said it had come about following conversations between them and HMRC.

BVRLA chief executive Gerry Keaney said: "The EV market is maturing and is no longer a niche. We need a mileage recompense rate that can adapt to energy prices and charging trends, so we are pleased to see HMRC respond so swiftly to the lobbying from the AFP and BVRLA.

"The AER for electric vehicles had not changed since 2018. This uplift is a positive move and shows that the government is serious about providing a supportive environment for the push to zero emission motoring."

AFP chair Paul Hollick said that the previous 4p per mile rate generally failed to cover reimbursement of fuel costs, when most individuals are now paying closer to an estimated 18p per kWh even when charging at home.

He added: "We very much welcome this move by HMRC. In truth, 5ppm is probably still too low - recent research among our members saw 6-7ppm mentioned as an appropriate rate - but it does represent an increase of 25% in one step, which is quite substantial.

"Importantly, it establishes the principle of revisiting and revising the AER rate as part of conversations between industry bodies and HMRC, which is an important development."