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New methodology for calculating advisory electric rates confirmed

There will be a new way for business drivers, who use electric vehicles, to calculate AERs.

A new methodology for calculating advisory electric rates (AERs) for business drivers using electric vehicles has been introduced.

AERs are widely used by employers to determine reimbursement rates for employees claiming business mileage.

However, last year the Association of Fleet Professionals and the BVRLA joined forces to call upon the UK Government to take steps to ensure the AERs for electric vehicles are fit for purpose.

The industry bodies voiced concerns that the five pence per mile rate was no longer reflective of real-world conditions.

AERs were introduced in 2018 as a simple way to refund business mileage for electric car drivers – the EV equivalent of advisory fuel rates (AFRs) for petrol and diesel cars.

It has now been confirmed that HMRC have switched to quarterly reviews – in line with AFRs – and increased AERs to eight pence per mile.

HMRC will use figures published in the Office for National Statistics (ONS) quarterly index for domestic electricity, which forms part of the Consumer Price Index.

And the good news is that Arnold Clark Vehicle Management is here to help guide you towards a cleaner fleet.

Switching to an electric car can bring significant tax benefits for businesses – and this is set to continue for the next two years.

The UK Government have stated that electric car benefit-in-kind tax will be 2% until 2025.

You can also visit one of our Innovation Centres, in Glasgow or Stafford, and speak to one of our business experts to find out more about making the switch to electric.

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