Two weeks ago now, we saw the introduction of the new split HMRC advisory electric rate (AER) for reimbursing electric vehicle drivers.
The government’s introduction of a new two-tiered AER for electric vehicle (EV) reimbursement represents a significant shift in how organisations can compensate employees for charging EVs used for business travel.
Yet it will be no surprise to hear that the introduction of a two-tier rate, 8p for home charging and 14p for public charging respectively, has triggered debate, discussion and ultimately confusion right across the industry.
Does it actually change things? Is it really a positive move or does it only complicate matters?
Barry Monks, UK Sales Director at The Miles Consultancy, said:
“Given the variables around where drivers charge their vehicle, the key question is all about how the charge is allocated to the appropriate mileage so that accurate and HMRC compliant reimbursement takes place. If we consider the mix of variables that will apply, the scope for overpaying or underpaying for business mileage becomes significant.”
We don’t know at this stage if further explanation and guidance from HMRC regarding the new AER structure is forthcoming but either way, we at The Miles Consultancy wanted to weigh in on this hot topic with a fairly simple message.
If any fleet managers are wanting to pay employees a rate other than the 8p, you’re going to need accurate records. Accurate trip information including locations travelled to and from, mileage, purpose and classification of whether it was a business expense, commute or private travel.
And if you’re keeping accurate records, why not just consider reimbursing your EV-driving employees for their business mileage at actual cost?
“The options are clear as far as TMC are concerned, in that you should retain clear evidence around business mileage claims.” explained Barry.
“Companies should be able to evidence payments made to cover public charging where the rate above the standard AER base rate of 8 pence per mile is being reimbursed.
“Simply put, a lack of supporting evidence of public charging for any payment over the 8 pence per mile leaves a company exposed. Not only this, but you’re likely to end up with disgruntled employees as even at a higher rate of 14 pence per mile, it does not adequately reimburse the employees who are having to use public charging on a regular basis, most definitely where rapid and ultra-rapid charging is used.”
TMC are perfectly positioned to help companies, arguably now more than ever before. The complexities surrounding EV reimbursement can appear to be overwhelming when you consider the different costs associated with charging, the different rates required and how these can be applied within payrolls/interfaces with expenses systems, but fear not.
It’s exactly the kind of burden we are able to take off your shoulders, leaving you free in the notion that all costs are accounted for, all mileage data is logged and the correct rate is used for each and every employee.
