Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of changing the Advisory Electric Rate each quarter in order to reflect changes in energy prices.

The Government introduced the Advisory Electric Rate (AER) in 2018. It applies to employees who use a fully electric vehicle as a company car.

The Advisory Electric Rate (AER) was changed in December 2021 from 4 pence per mile (ppm) to 5ppm. This was calculated using published consumption rates, adjusted to reflect real driving conditions, and the average cost of electricity.

However, employers are not required to use the AER. Instead, they can use different rates to reflect their employee’s circumstances. Provided they show that the bespoke rates do not result in a profit for the employee, there will be no tax to pay.

The Government keeps this policy under review.