Group calls for standardised AFR on fleet-based electric vehicles
17 May 2017
17 May 2017
UK organisation for fleet providers ACFO has published advisory fuel rates (AFR) for plug-in vehicles and has called on HM Revenue and Customs (HMRC) to do the same, after supplying it with real world mileage reimbursement figures.
The figures for fully electric vehicles (EVs), range-extended EVs and plug-in hybrid models with petrol and diesel engines were submitted after ACFO hosted a fleet industry summit, which included representatives of the British Vehicle Rental and Leasing Association, contract hire and leasing companies, vehicle manufacturers producing plug-in vehicles and fleet managers operating zero emissions and plug-in hybrid cars.
Some of the AFRs proposed by the group include £0.04 a mile (€0.03 per km) for EVs with a battery capacity up to 40kWh, while those above should get £0.05 a mile (€0.04 per km). Meanwhile, plug-in hybrid electric vehicles (PHEVs) with petrol engines, linked to electric mileage range and current engine capacity-based AFRs for petrol cars should garner £0.05-0.19p a mile (€0.04-0.14 per km) and diesel PHEVs with the same conditions for diesel fuel offering £0.05-0.12 a mile (€0.04-0.09 per km).
Currently, there is no agreed official AFR rate for EVs in the UK, only a suggestion by the HMRC that can add confusion for a business needing to reimburse drivers. This is because, according to HMRC, electricity is not considered to be a fuel for the purposes of Car Fuel Benefits legislation.
However, at the ACFO summit in 2015, a spokesperson for the government department told delegates that they should be using the actual costs of recharging vehicles to work out reimbursement. However, this is confusing as there are two scenarios for home-charging which would have different outcomes for tax purposes.
If the employee were to charge their car using their own electricity, any reimbursement would be taxed as earnings. However, if the electricity is provided by the employer, with a vehicle charging point installed and electricity used paid for by the company, then there is no additional benefit and so no tax is due. In both instances, the employer is paying for the full cost of electricity used, yet only one results in a taxable benefit. There are also multiple other scenarios, all of which result in little or no taxable benefit.
Speaking at the 2017 summit, ACFO chairman John Pryor, said: ′ACFO acknowledges that it is possible for businesses to calculate rates themselves and then obtain permission from HMRC to use them to reimburse drivers. However, it can be extremely time consuming and difficult to obtain all the relevant data to undertake those calculations. Far better for HMRC to publish official figures as it does for petrol, diesel and LPG cars.’