Advisory Electric Rate Q2 2026: the UK update fleets must apply
HMRC publishes the Advisory Electric Rate every quarter. Here's how to apply the Q2 2026 change without reopening payroll.
What the AER actually is
The Advisory Electric Rate (AER) is HMRC's published per-mile figure for reimbursing employees who drive a *company-provided* electric car on business. It is the EV equivalent of the Advisory Fuel Rates (AFR) used for petrol and diesel company cars. The AER is *not* the same as the AMAP rate — AMAP applies when an employee uses their *own* car for work; AER applies when the employer owns or leases the car and the employee pays for the electricity.
From 1 December 2024 the AER moved to a quarterly review cadence aligned with the AFR (1 March, 1 June, 1 September, 1 December), which means a fleet operator gets four mandatory price-update windows a year for EV drivers.
What changed in Q2 2026
For 1 June 2026, HMRC raised the AER to reflect rising domestic and rapid-charging electricity prices over Q1. Operators using the previous figure between 1 June and the date payroll catches up have two options under HMRC guidance:
1. Apply the new rate from 1 June and back-pay the difference for the partial period. 2. Continue paying the previous rate for two months (HMRC's standard transition window) and switch on the next quarter boundary.
Option 2 is the lighter-touch route for SMEs without a payroll team running real-time gross-to-net adjustments.
When the AER is wrong for your fleet
The AER is an average. If your drivers exclusively rapid-charge on motorways at premium tariffs, the actual cost per mile can be 50-80% higher than the AER. HMRC permits employers to use a *higher bespoke rate* provided they can show evidence of the actual electricity cost — typically a sample of charging session receipts and the manufacturer's published efficiency figure.
The inverse also holds: if your drivers charge almost exclusively at home on cheap overnight tariffs, the AER may overpay the cost. Underpaying is fine; overpaying without evidence creates a benefit-in-kind exposure (the difference becomes taxable pay).
Operational checklist for the change
1. Update the AER table in the reimbursement system on or before 1 June. Most teams centralize this in a single rates file and let the calculator pick up the new value automatically. 2. Send the 'AER changed' notice to drivers and managers; include the new pence-per-mile and the effective date. 3. Confirm the payroll cycle that crosses the boundary handles two rates correctly. Most payroll engines do; spreadsheet-based ones often do not. 4. Archive the old rate in the rates table with its effective date range — auditors care about historical accuracy as much as the current value. 5. Schedule the next review date (1 September) on the finance calendar.
What to tell drivers
Keep the message short and concrete: 'From 1 June 2026, the per-mile rate for company EVs increases to Xp/mile. Your existing trip log entries continue to use the old rate; trips on or after 1 June use the new rate. No action required.'
Do not promise drivers a rate review every quarter — HMRC may leave the AER unchanged. The promise is that your fleet will track HMRC's published figure within one pay cycle of any change.
Bottom line
The AER is a low-effort, high-trust mechanism for EV fleet reimbursement when the rates table is automated and payroll handles split-period rates. The Q2 2026 change is small in absolute pence terms but is the first one your business operates after the cadence-alignment with AFR — getting the process right this quarter de-risks every future change.