New two-tier mileage rates for electric vehicles

The amount that employers can reimburse staff for business travel in company cars changes from 1 September 2025. What are the new rates, and why is this update different to previous ones?

Advisory fuel rates for company cars are updated by HMRC on a quarterly basis due to fluctuations in fuel prices. The rates determine the amount that can be paid to an employee using a company car for business mileage, or where an employee has to reimburse their employer for private journeys. Where HMRC’s rates are used, there are no income tax consequences for the employee. HMRC has now published the advisory rates applicable from 1 September 2025. The rate per mile will be:

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Engine size	Petrol	LPG
1,400cc or less	12p	11p
1,401cc to 2,000cc	14p	13p
Over 2,000cc	22p	21p

 

Engine size	Diesel
1,600cc or less	12p
1,601cc to 2,000cc	13p
Over 2,000cc	18p

The big difference this time is the introduction of a second electricity rate for fully electric cars. For 1 September, the two rates will be:

• 8 pence per mile for home charging
• 12 pence per mile for public charging