The UK’s roads are undergoing a quiet revolution. As more employees embrace electric vehicles (EVs) as their personal cars, your grey fleet—privately owned vehicles used for work—is likely becoming a mix of petrol, diesel, and electric. This trend offers exciting opportunities for sustainability and cost savings, but it also introduces new complexities that can leave businesses exposed.
At DAVIS, we understand that staying ahead of these changes is key to effective grey fleet management. The recent updates to HMRC’s mileage guidance are a prime example, and they demand a fresh look at your policy and processes.
Understanding the Key Difference: AMAP vs. AER
One of the most common points of confusion in grey fleet management is the difference between the Approved Mileage Allowance Payments (AMAPs) and the Advisory Electric Rate (AER). Get this wrong, and you could be creating tax complications for your business and your employees.
Approved Mileage Allowance Payments (AMAPs): This is the rate for employees using their personal vehicles for business travel, regardless of fuel type. The rate remains a flat 45p per mile for the first 10,000 business miles, dropping to 25p for every mile thereafter. For employees with an EV, this model is a significant financial benefit, as the cost of electricity is often far less than the pence-per-mile rate they are reimbursed.
Advisory Electric Rate (AER): This rate applies specifically to employees who drive a company-provided EV for business. Previously a single, flat rate, HMRC has now introduced a new, split rate to better reflect real-world costs. This is an important development for businesses with company-owned EV fleets, but it does not apply to the grey fleet.
The New AER: A Step Towards Fairness, A Challenge for Administration
On 1 September 2025, HMRC split the AER into two distinct rates:
- Home Charging: 8p per mile
- Public Charging: 14p per mile
This is a welcome change that acknowledges the significant cost difference between charging at home (typically cheaper) and using public charging points (often more expensive due to VAT and infrastructure costs).
However, while this is a step in the right direction, it creates a new administrative burden for any business still relying on manual systems.
The Logistical Challenge: A New Layer of Complexity
For your business to manage these new rates, employees must now not only track their mileage but also where their vehicle was charged.
Consider a simple business journey:
An employee charges their EV at home before a morning client visit. They top up at a public charger during the day before a second meeting. Then they finish the day with the final leg of the journey home.
A traditional mileage claim system built for petrol or diesel will struggle to account for the different rates applied to different parts of the same journey. This reliance on fragmented data and manual input opens the door to human error, compliance issues, and unnecessary administrative work.
Your EV Grey Fleet: An Opportunity for Cost Savings
Despite the administrative hurdles, a well-managed EV grey fleet presents a clear opportunity for cost savings.
Reduced Employee Costs: For employees using their personal EV for work, the AMAP rate of 45p per mile can lead to significant savings. The cost of electricity is often far lower than this rate, making it a compelling financial incentive for them to choose an EV.
Lower Overall Costs: By empowering employees with EVs to use the AMAP rate, businesses can benefit from a streamlined and transparent reimbursement process. The “win-win” scenario of fair compensation for the employee and efficient management for the employer becomes a reality.
How to Stay Ahead: The Power of the Right Tools
The key to navigating the new landscape of EV grey fleets is not to bury your head in the sand. It is to equip your business with the right tools.
A robust platform like DAVIS provides the clarity and control you need by:
- Centralising Data: It allows employees to easily submit claims while tracking all relevant vehicle and licence information in one place.
- Automating Compliance: DAVIS verifies the validity of driving licences and vehicle documents, ensuring your fleet remains compliant and your business meets its duty of care obligations.
- Providing Clarity: With a clear overview of your entire grey fleet, including a breakdown of vehicles by fuel type, you can make informed decisions about your business’s travel policy.
The EV revolution is here, and it’s driving right into your grey fleet. Don’t let new complexities turn a cost-saving opportunity into a compliance headache.
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