A survey by Mina, an electric vehicle charging payment company, and 360 Media Group has found that 74% of fleets are looking at ways to manage business mileage for electric company vehicles. Over the next year, fleet-decisionmakers will be investigating how best to pay for the charging costs of electric company cars and vans.
The HMRC have recently increased the Advisory Electricity Rate (AER) that employers can use from 4 pence per mile (ppm) to 5ppm. However, Mina states that the new tax-free reimbursement rate is still underestimating the true cost of recharging electric vehicles. For an electric van, the average recharging costs are 7.8ppm, while for a larger van this can rise to 15.7ppm.
Ashley Tate, CEO and co-founder of Mina commented ‘Relying on the AER means many employers are underpaying their drivers without even realising.’
According to data collected by 360 Media, 55% of companies currently rely on the official AER of just 5ppm. When comparing the reimbursement rate with the actual charging costs, it suggests that a van driver who averages 13,000 miles per year would lose at least £346. According to Mina, this loss is likely to increase as energy prices continue to rise unless changes are made.
Company car drivers are also struggling. Less than half of available electric cars could operate at 5ppm when energy tariffs were at 16p/kWh. With tariffs now closer to 20p/kWh, drivers will face greater difficulties and potentially greater losses than before.
The issue is further complicated by the vast difference in home and public charging costs. While a driver might be paying 5 pence per kwh at home, at a motorway charging point they could be paying 70 pence per kwh. Again, this makes ensuring that the correct reimbursement rates are in place difficult.
Currently, more than a third of fleet-decision makers are attempting to calculate their own electric vehicle miles reimbursement rates. Not only is this a complex and potentially risky process, but as stated by Tate ‘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.’
The variance in prices at home versus in public, combined with the discrepancy in the AER and actual charging rates are contributing to a complicated payment scheme. A solution which balances the benefits of electric vehicles and protects companies and drivers from financial loss is needed. With the number of electric vehicles on the roads increasing, it is hoped that an effective way to manage electric vehicle mileage is found quickly.
