How HMRC’s New EV Mileage Rates Affect Your Grey Fleet
In March 2025, HMRC officially confirmed the advisory mileage rate for electric vehicles (EVs), providing clarity for businesses and drivers alike. While company-owned EVs have already been incorporated into many fleet policies, this update has significant implications for what’s often the trickiest area to manage, your grey fleet.
What’s Changed?
HMRC has set the Advisory Electric Rate (AER) at 9p per mile for fully electric company cars. This rate is reviewed quarterly and is intended to reflect the average cost of electricity per mile. It allows employers to reimburse employees driving company EVs for business mileage without tax implications, or for employees to repay private use of company EVs.
For the first time, this clear benchmark can also guide grey fleet mileage claims, that is, when employees use their own EVs for business purposes.
What Does This Mean for Your Grey Fleet?
- Standardised Reimbursement
Previously, employers were left guessing how much to reimburse employees for using their personal EVs for business. Now, with HMRC’s 9p per mile guideline, businesses have a fair, tax-free reference point for reimbursements. - Improved Compliance
Grey fleet usage is often hard to monitor, particularly when it comes to mileage claims. Using the AER as a consistent standard helps ensure your grey fleet reimbursements are reasonable and defendable in the event of a tax audit. - Cost Efficiency
Compared to the Approved Mileage Allowance Payment (AMAP) of 45p per mile for petrol and diesel vehicles (for the first 10,000 miles), reimbursing EV drivers at 9p per mile can represent a significant cost saving to your business, particularly if you have high grey fleet usage. - Encouragement to Go Electric
This new rate may encourage employees using their own vehicles for work to consider switching to EVs. This supports your business’s sustainability goals while also reducing long-term costs. - Fleet Policy Updates Needed
If you haven’t already, now’s the time to review and revise your grey fleet policies. Ensure your documentation covers:- Reimbursement at the new AER
- Evidence of business mileage
- Vehicle suitability and insurance requirements
- Roadworthiness and servicing expectations
Managing Grey Fleet Made Easy
Managing a grey fleet can be a compliance headache, but it doesn’t have to be. Tools like Fleet Connect (an option with Autoserve’s Fleet Management Package) give you visibility over vehicle usage, driver details, and mileage tracking, helping you stay on top of your legal and financial obligations.
With HMRC’s clear EV mileage rate now in place, there’s never been a better time to streamline your grey fleet strategy. Talk to our sales team today.
