If your employees drive company electric cars and charge them at home, you can reimburse their electricity costs using HMRC’s Advisory Electric Rate (AER). From 1 March 2026, the AER for home charging is 7 pence per mile and 15 pence per mile for public charging. Provided you stay within these rates and follow the correct process, the reimbursement is tax-free for the employee and a deductible business expense for you.
This guide explains the rules, the rates, how to apply them in practice, and what to do when home charging is not the only location involved.
Key Takeaways
- From 1 March 2026, HMRC’s Advisory Electric Rate (AER) for home charging is 7p per mile; for public charging it is 15p per mile.
- Reimbursements at or below the AER are tax-free for the employee and do not create a taxable benefit.
- The AER applies to company electric cars only; it does not apply to employees who charge a personal vehicle using their own electricity.
- Workplace charging provided by an employer is exempt from BIK tax provided it is available to all employees at that location — not just directors or selected staff.
- Electricity is not classified as “fuel” under the company car fuel benefit rules, so there is no fuel benefit charge when an employer reimburses electricity costs.
What Is the HMRC Advisory Electric Rate?
The Advisory Electric Rate (AER) is published by HMRC alongside the standard advisory fuel rates for petrol and diesel cars. It sets the maximum pence-per-mile reimbursement rate that employers can pay employees who charge company electric cars, without creating a taxable benefit.
HMRC introduced a separate AER for public and home charging in 2024, recognising that the cost of electricity differs between locations.
Current AER rates (from 1 March 2026):
| Charging location | Advisory Electric Rate |
|---|---|
| Home charging | 7p per mile |
| Public charging (slow/fast, under 50kW) | 15p per mile |
Source: GOV.UK Advisory Fuel Rates. Verify the current rates before processing any reimbursements, as HMRC updates these quarterly.
Why There Are Two Separate Rates
Electricity costs differ materially depending on where charging takes place:
Home charging typically uses the employee’s domestic tariff, which in 2026 includes Economy 7 overnight rates or off-peak EV tariffs. These can be as low as 7—10p per kWh, making home charging the cheapest option per mile.
Public charging — particularly rapid and ultra-rapid chargers — can cost 50p to 80p per kWh or more, which is why the public charging AER is more than double the home rate.
When an employee’s journey involves both home and public charging in a billing period, HMRC allows you to apportion the mileage between the two rates on a fair and reasonable basis, using actual charging data where available.
How to Apply the AER in Practice
Step 1: Establish a mileage recording system
Employees must keep a log of business miles driven in their company electric car. This is the same requirement as for any other company car mileage claim. The log should record:
- Date and purpose of each journey
- Start and end locations
- Business miles driven
Step 2: Identify the charging location
Where possible, record whether each charge was at home or at a public charge point. Many vehicle apps and fleet management systems record this automatically. If the employee charges exclusively at home, the 7p rate applies across all business miles.
Step 3: Calculate the reimbursement
Multiply the business miles by the applicable AER:
- Business miles charged at home × 7p = reimbursement amount
- Business miles charged publicly × 15p = reimbursement amount
Step 4: Pay through payroll or expenses
Process the reimbursement through payroll or a company expense claim. Because the payment does not exceed the AER, no income tax or NI is due on the amount. No P11D reporting is required for payments within the AER.
What If the Employer Pays Below the AER?
If you pay employees less than the AER for business miles in a company electric car, employees cannot claim Mileage Allowance Relief (MAR) on the difference in the way they could for a personal vehicle. MAR applies to personal vehicles, not company cars.
However, if the company car BIK tax is already being collected, the shortfall in electricity reimbursement simply represents an unfunded cost to the employee. Most employers therefore aim to pay at or near the AER to avoid creating a hidden cost burden.
Workplace Charging: a BIK-Free Benefit
Providing charging facilities at or near your workplace is one of the most effective low-cost benefits you can offer employees who drive electric cars.
HMRC confirms that if an employer provides charging at or near the workplace and makes the facility available to all employees at that location, no taxable benefit arises for the employee. The electricity cost is a business expense for the employer.
Conditions that must be met for the workplace charging exemption to apply:
- The charge points must be at or near the employer’s premises
- The facility must be available to all employees at that location, not just directors or certain grades
- The charge points must be accessible during working hours
Important: the workplace charging exemption does not apply when charging facilities are provided at an employee’s home. Home charging reimbursements must be handled via the AER process described above.
The Workplace Charging Scheme Grant
If you have not yet installed workplace charge points, the government’s Workplace Charging Scheme (WCS) provides a grant towards installation costs.
From 1 April 2026, the grant increased to up to £500 per socket. The WCS has been extended until 31 March 2027, after which it closes permanently. Verify current eligibility and grant rates at GOV.UK before applying.
The grant is available to employers (including charities and public bodies) who meet the eligibility criteria. Installation must be carried out by an approved installer. See our guide to the Workplace Charging Scheme for more detail.
Employees Charging Personal Electric Cars at Work
A separate rule applies when employees charge their own (personally-owned) electric cars using workplace charging facilities provided by their employer.
HMRC confirms that where an employer provides workplace charging facilities available to all employees, allowing employees to charge personal vehicles creates no taxable benefit. This applies even if the employee’s personal car is not a company car.
This means you can allow employees with personal EVs to top up at your workplace charge points without any BIK implications, provided the facility is genuinely available to all staff.
Salary Sacrifice and Home Charging
For employees using a salary sacrifice electric car, the same AER rules apply for home charging reimbursement. The salary sacrifice arrangement does not change the HMRC treatment of mileage reimbursements.
If you offer salary sacrifice to employees, combining it with a home charge point installation and AER-based mileage reimbursement creates a comprehensive, tax-efficient package. See our salary sacrifice electric car employer guide.
Frequently Asked Questions
What is the HMRC Advisory Electric Rate for home charging in 2026? From 1 March 2026, the Advisory Electric Rate for home charging is 7 pence per mile. The rate for public charging (slow or fast, under 50kW) is 15 pence per mile. Verify the current rate at GOV.UK before processing reimbursements, as HMRC reviews advisory rates quarterly.
Is reimbursing an employee’s home charging costs tax-free? Yes, provided the reimbursement does not exceed the HMRC Advisory Electric Rate for the relevant charging location. Payments at or below the AER are tax-free for the employee and do not need to be reported on a P11D. Payments above the AER are taxable.
Can I reimburse home charging for employees on salary sacrifice schemes? Yes. The AER applies to any company electric car, including those provided through salary sacrifice. Business mileage charged at home can be reimbursed at 7p per mile tax-free. Keep mileage records to support the claim.
Does electricity count as fuel for BIK purposes? No. HMRC does not classify electricity as fuel for the purposes of the company car fuel benefit charge. This means there is no fuel benefit tax liability when an employer reimburses electricity costs for a company electric car, provided payments stay within the AER.