How HMRC’s Electric Mileage Rate Shortchanges Drivers Without a Driveway

• HMRC’s advisory electricity rate pays company car and business mileage drivers 7p a mile for charging at home, but only 15p a mile if they rely on public chargers.
• Public rapid charging now regularly costs well above the equivalent of 15p a mile once the real price per kWh is worked through, leaving drivers without a driveway out of pocket on every business trip.
• The rates are reviewed four times a year, on 1 March, June, September and December, but drivers must claim the correct one manually or risk being paid less than their actual cost.

The Reimbursement Rate That Assumes You Have a Driveway

HMRC’s current advisory electricity rate, effective from 1 September 2026, pays employees driving an electric company car 7p a mile when they charge at home, and 15p a mile when they rely on public charging. Both figures are meant to approximate the real cost of the electricity used, reimbursed tax-free through expenses or deducted from a driver’s own fuel bill when a company covers charging directly. In practice, the two-tier structure hands a clear financial advantage to drivers who own their own home with a driveway or garage, and a quiet, ongoing shortfall to everyone who cannot charge overnight on their own property.

A driver who charges at home on a typical domestic electricity tariff can usually charge a car for close to, or even under, the 7p a mile HMRC allows, meaning the advisory rate roughly matches their real cost. A driver who has no choice but to use public chargepoints, because they live in a flat, rent a property with no off-street parking, or simply do not have a driveway, faces a different reality entirely.

Why 15p a Mile Falls Short at a Public Charger

Public rapid and ultra-rapid chargers, the type most business drivers rely on for a quick top-up between appointments, routinely charge well above the price per kWh that would keep a driver within HMRC’s 15p a mile allowance. Rapid charging prices at motorway service stations and dedicated hub sites have been running at levels that push the real cost per mile for an average electric car noticeably above the advisory rate, meaning a driver claiming the standard 15p is often being reimbursed for less than they actually spent, and covering the difference from their own pocket without realising it unless they track every charging receipt closely.

The gap is not trivial over a working year. A field-based employee covering 12,000 business miles annually in an electric car, relying mainly on public charging because they have no home charge point, can find themselves several hundred pounds worse off over twelve months compared to a colleague doing identical mileage who simply happens to own a driveway, purely because of where each of them lives rather than anything about how they do their job.

Why the Rate Lags Behind Real Prices

HMRC reviews advisory fuel and electricity rates four times a year, on 1 March, 1 June, 1 September and 1 December, using average cost data gathered in the weeks before each review date. Public charging prices, unlike petrol and diesel pump prices, vary enormously by network, charger speed and even time of day, making a single national average an imperfect fit for any individual driver’s actual experience. A driver who mostly uses one of the cheaper rapid networks might come close to the 15p rate, while a driver relying on the most expensive ultra-rapid hubs at motorway services can be paying close to double that per mile, with HMRC’s rate not adjusting for that difference within a single quarter.

Employers are not required to use the advisory rates at all. They can choose to reimburse the actual cost an employee incurs instead, provided they keep proper records, but doing so creates more administrative work than simply applying HMRC’s published figure, which is why most payroll systems default to the advisory rate regardless of whether it accurately reflects what a given employee actually paid.

What Drivers Without a Driveway Can Actually Do

Employees who believe the advisory rate is consistently underpaying them for real public charging costs can ask their employer to reimburse actual expenditure instead of the flat advisory rate, provided they keep dated charging receipts showing the cost per session. This shifts the paperwork burden onto the employee but closes the gap entirely, since actual cost reimbursement is not capped at HMRC’s published rate and does not create a taxable benefit as long as it reflects genuine business charging costs with evidence to support it.

Drivers who cannot or do not want to move to actual-cost claims should at minimum keep a running log comparing their real charging spend against what they have been reimbursed at the advisory rate, since this is the only way to know whether the standard rate is leaving them out of pocket over a full quarter, and provides the evidence needed if they later decide to challenge their employer’s reimbursement policy or request a switch to actual costs.

How the Rate Compares to Petrol and Diesel

Petrol and diesel advisory fuel rates are split by engine size rather than by where the driver fills up, since pump prices vary only modestly by location and fuel type across the country. A driver with a 1.6 litre diesel is paid 15p a mile regardless of whether they filled up at a supermarket forecourt or a motorway service station, because the underlying price difference between those two options is usually only a few pence per litre. Electricity pricing does not behave the same way. The gap between a domestic tariff and a public rapid charger is proportionally far larger than the gap between a supermarket and motorway fuel pump, which is exactly why splitting the electric rate into home and public tiers was introduced in the first place, but the public tier still does not fully close the real-world gap for drivers facing the highest rapid charging prices.

This creates an odd outcome where the system built to be fairer than a single flat electric rate still leaves a meaningful group of drivers worse off than their petrol and diesel colleagues, who at least have a reimbursement rate that closely tracks what they actually spend regardless of which fuel station they use.

Company Car Policy Gaps Employers Rarely Explain

Few employers proactively explain the difference between the home and public electric rates when an employee is handed an electric company car, and fewer still flag that switching to actual-cost reimbursement is an option at all. Staff are frequently defaulted onto the advisory rate without ever being told a driveway assumption sits behind the number on their expense claim. Human resources and payroll teams, focused on simplicity, tend to apply whichever single rate is easiest to administer across an entire fleet, rather than asking each driver whether they charge at home or in public, which is the one piece of information that determines whether the standard rate is fair to them individually.

Drivers taking on an electric company car for the first time should ask their employer directly, before accepting the vehicle, whether mileage will be reimbursed at the advisory rate or at actual cost, and specifically whether the answer changes if they do not have home charging available. That single question, asked at the point of accepting the car rather than months into ownership, is the clearest way to avoid quietly subsidising a company’s mileage bill out of a personal budget.

The Fix That Is Not Coming Soon

Campaigners for a fairer charging system have pushed HMRC to introduce a mileage rate that reflects regional or network-specific pricing rather than a single national average, similar to how petrol and diesel rates are already split by engine size. No such change has been announced, and the quarterly review cycle means any driver relying heavily on public charging faces the same structural mismatch for the foreseeable future, reimbursed at a rate designed around an assumption, a driveway and a home charger, that does not describe their actual situation.

Sources:

• https://www.gov.uk/guidance/advisory-fuel-rates
• https://www.zap-map.com/charge-points/public-charging-prices/