What is an Advisory Fuel Rate?
Advisory Fuel Rates (AFRs) are rates that the government propose for businesses to use when reimbursing their employees for their fuel usage whilst driving a company car or commercial vehicle, or when a business requires reimbursement when employees use a company vehicle for private use.
A company may set its own mileage rates, but if these rates don't exceed the AFRs specified by the government for the engine size and fuel type of the vehicle, there won't be any taxable profit and no Class 1A National Insurance to pay.
A company can also use their own rates to reflect their circumstances if the vehicles are more fuel-efficient or if the cost of business travel is higher than the suggested AFRs.
What is the Advisory Electric Rate?
As with ICE vehicles that use petrol and diesel, there is a government set rate for electric vehicles too. The Advisory Electric Rate (AER) currently stands at 5p per mile, however, it simply is not fit for purpose when reimbursing employees for their charging costs.
If an employee had a home tariff rate of £0.280 (the current UK average according to Mina) there would be an annual shortfall of £867, based on an average of 3p miles per kWh, if the AER was used to reimburse, leaving employees out-of-pocket. A number that will only increase as electricity prices rise.
Mina, however, bypasses the issue of short-changing employees by removing the need for businesses to depend on the AER. Mina Homecharge® and Mina Chargepass® monitor tariff rates in home and public so that the accurate amount is always paid direct to supplier. The best bit, no Benefit-in-Kind tax is needed as we have HMRC approval.
@ Mina we make paying for EV charging radically simple
Our award winning solution was created to bring 100% accuracy and unrivalled simplicity to fleet charging payments.