Industry bodies call on AER review

The BVRLA and the Association of Fleet Professionals have joined forces to call upon government to ensure the Advisory Electricity Rate (AER) for electric vehicles is fit-for-purpose.

They fear the current 4 pence per mile rate, which is unchanged since 2018, is no longer reflective of real-world conditions.

The industry bodies have asked the HMRC to review the current AER level, establish an ongoing review process for the AER, create a separate AER for vans, and begin work on a hydrogen AFR.

Paul Hollick, chair at the AFP, 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 4×4. Clearly, the fuel costs of these vehicles are not the same.

“The Advisory Fuel Rates (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 rate and the process for determining it is not fit-for-purpose. It has the potential to compromise the uptake of electric vehicles, 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.”