4 Dec 18

New guide helps fleets to reimburse business mileage in EVs and hybrids

Fuel management specialist TMC has published a guide to help companies accurately reimburse drivers of alternatively fuelled vehicles for business mileage.

The guide sets out different reimbursement methods for battery-powered vehicles, hybrids and plug-in hybrids (PHEVs) in the UK.

Electric vehicles

  • In the UK, the Government has recently published an Advisory Electric Rate (AER) of 4 pence per mile for business mileage in a company electric vehicle.
  • Alternatively, employers can reimburse company drivers on the basis of estimated electricity costs from a domestic supply
  • Or pay the actual cost of domestic power consumed by the EV.

Plug-in hybrids

PHEV mileage reimbursements are more complicated, however, with payments split between petrol/diesel and electric.

“With PHEVs' fuel use varying by up to 300 mpg depending on the drivers' journeys and charging practice, reimbursing for PHEV fuel at a flat rate will rarely be realistic or fair,” cautions TMC.

The consultancy advises that employers can:

  • Pay company drivers the official Government approved petrol or diesel reimbursement rate.
  • Reimburse on a mix of electric and fossil fuel reimbursement rates for each journey, based on the zero emission range of the vehicle.
  • Use a blended figure of fuel and electricity rates.
  • Or pay the actual cost incurred by the employee.

Hybrid vehicles

For hybrid vehicles, TMC advises that employers can:

  • Pay the official Government approved petrol or diesel reimbursement rate.
  • Pay a figure based on a blend of petrol/diesel and electric – this figure must be below the official reimbursement rate for vehicles with internal combustion engines.
  • Calculate the true cost to the employee and use this figure.

Fuel cards of the future

“Employees who run a PHEV or hybrid vehicle may still require a fuel card. Drivers of EVs could be issued with an expense card that the employee can use at public electric charge points,” said TMC.

Authored by: Jonathan Manning