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Fleets ‘urgently’ seek payment solution for EV business mileage

Electric car plugged in to a charge point

Three-quarters (74%) of fleets will be looking at how to manage electric vehicle (EV) business mileage in the next 12 months, new research suggests.

The survey of 200 fleet decision-makers, by Mina and 360 Media Group, found fleet decision-makers are urgently seeking solutions to pay for the charging costs of electric company cars and vans.

HMRC recently increased the Advisory Electricity Rate (AER) that employers can use for the tax-free reimbursement of business miles, from 4 pence per mile (ppm) to 5ppm.

However, Mina says that the new rate still massively underestimates the true cost of recharging electric vehicles (EVs).

The average pence per mile electricity cost for an electric van is actually 7.8ppm, and rises to as much as 15.7ppm for the largest vans

This means that a van driver covering the average 13,000 miles per year would be short-changed by at least £346 per year, with the figure likely to be much higher as energy prices continue to soar, says Mina.

The problem is just as acute for company car drivers, with well below half of electric cars capable of operating at 5ppm when energy tariffs were as low as 16p/kWh. Mina, an EV charging payment company, says tariffs are now closer to 20p/kWh.

Mina explains that complicating the issue is the extreme variance between home and public charging costs. A driver might pay as little as 5 pence per kwh at home and 70 pence on the motorway.

The research conducted by 360 Media found that just over half (55%) of companies currently rely on the official AER of just 5pm.

“Relying on the AER means many employers are underpaying their drivers without even realising,” said Ashley Tate, CEO and co-founder of Mina.

Meanwhile, more than a third (35%) of fleet decision-makers are attempting to calculate their own EV mileage reimbursement rates; a complex and potentially risky process, it says. 

“Over-paying drivers for EV business miles not only erodes the savings from running EVs but could also leave a company and its drivers on the wrong side of an HMRC investigation,” added Tate.

> Interested in comparing electric vehicle data? Check out our EV tool.

> Interested in ensuring the efficient use of EVs. Check out our dedicated editorial sections: Insight & policy | EV news | Charging & infrastructure | Costs & incentives | Benefit-in-kind | EV case studies | EV road tests

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