Hidden Running Costs of Company EVs: A 2026 HR Guide
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Company EV running costs are higher than most fleet policies account for, particularly for drivers without home charging access. HMRC's Advisory Electricity Rate (AER) reimburses public charging at 15p per mile, a rate based on slower public chargers rather than the rapid and ultra-rapid networks most business drivers rely on, which averaged 79p per kWh in June 2026. Salary sacrifice charging closes this gap, letting employees pay for public, home, and workplace charging from gross salary and cutting costs by 20 to 50 percent.
This gap shows up in ordinary ways. An HR director spots that company EV drivers are spending more on personal charging than their old petrol allowance ever cost, with nothing about their mileage changed. The reimbursement structure built for petrol, priced per litre, doesn't map onto electricity priced by network and speed.
This is a financial wellbeing issue rather than a fleet management one. Employees end up absorbing hidden EV costs that the business assumed it had already covered, and closing the gap needs no change to existing lease or company car arrangements.
The Four Hidden Running Costs of Running a Company EV in 2026
HMRC reimburses public charging at 15p per mile. Real-world rapid charging can cost up to 25.6p. Company EV running costs look straightforward on paper, but in practice, there are four cost gaps that sit underneath the headline savings. Most fleet policies were never built to catch them.
1. The AER Doesn't Match Rapid Charging Reality
HMRC's Advisory Electricity Rate (AER) for public charging is 15p per mile, calculated using slow and fast public chargers at 54p per kWh. Rapid and ultra-rapid charging, the kind most business travellers actually use, averaged 79p per kWh according to Zapmap's June 2026 Price Index, rising to 92p per kWh on the most expensive networks. At the same efficiency HMRC uses to set the AER, that's roughly 22p to 25.6p per mile in reality. Employers reimbursing strictly at 15p are leaving drivers to cover the difference themselves, with no mechanism to flag it.
2. Public Charging Still Carries a VAT Penalty
Public charging is taxed at 20% VAT against 5% for domestic electricity, a gap that applies whether the driver is claiming business mileage or paying for personal charging out of pocket. A 2026 First-tier Tribunal ruling, Charge My Street Ltd v HMRC, found that public charging should qualify for the reduced rate. HMRC's appeal is ongoing, so 20% remains the practical position for now.
3. Personal Charging Isn't Reimbursed at All
The AER only covers business mileage. Every personal mile, the school run, the weekend trip, the commute: if it isn't classed as business travel, it’s charged at whatever the public network costs that day, paid from take-home pay. This is one of the hidden costs of personal EV charging that sits entirely outside company mileage policy.
4. None of This Is Visible to the Employer
Fuel cards gave employers a single, auditable line for petrol running costs. Public EV charging, spread across apps, RFID cards, and personal bank accounts, leaves no equivalent trail. The cost is very real every month, and it stays invisible until it surfaces as a grievance or an unexplained retention issue.
Key Takeaways
AER's 15p per mile assumes slower, cheaper public charging rates
Rapid and ultra-rapid charging can cost double the reimbursed rate
Public charging carries 20% VAT against 5% for home charging
Personal mileage charging costs sit entirely outside company mileage reimbursement
Why Do Drivers Without Driveways Absorb the Most Cost?
Around 9 million UK households, roughly 32.8% of the total, have no off-street parking and no realistic option to install a home charger. For these company EV drivers, the public network isn't a backup. It's the only option, every charge, every week, and it drives up their total cost of EV ownership regardless of how efficiently they drive.
The Home Versus Public Price Gap
Home charging typically runs at 8p to 27p per kWh. Rapid and ultra-rapid public charging averaged 79p per kWh in June 2026, a gap of up to ten times for the same electricity, before VAT differences are even factored in. A driver with a driveway charges overnight at the cheaper rate and barely notices the cost. A driver without one pays the public rate every time.
Why Is This an Equity Issue?
Drivers without driveways rely on public chargers for 100% of their electricity, not occasional top-ups
The AER's 15p per mile public rate assumes slower charging; many drivers can't access it on a working day
20% VAT on public charging compounds the per-kWh premium these drivers already face
None of it shows up in standard fleet reporting, so the charging equity gap goes unaddressed by default
For HR teams building an EV-ready benefits package, this is a structural cost difference between two employees doing the same job, determined by where they happen to live.
Key Takeaways
Around 9 million UK households have no off-street parking access
Public charging costs up to ten times more than home charging
Drivers without driveways pay the public rate for all their charging
The gap creates real inequity between otherwise identical company car drivers
What Are Employers Doing To Close This Gap?
Forward-thinking HR and fleet teams aren't waiting for HMRC to recalibrate the AER. They're auditing real-life charging costs against what the AER assumes, rather than treating the advisory rate as a proxy for reality, and consistently finding that drivers without home access carry the largest shortfall.
Separating Business Mileage From Personal Charging Cost
These need two different fixes. Business mileage reimbursement is one problem; personal charging, which sits outside AER altogether, is another. Employers reviewing their fleet operations are increasingly treating these as separate line items rather than assuming one benefit covers both.
Building Charging Into the Benefits Conversation
Many employers are treating 2026 as the year to implement a dedicated EV charging benefit, rather than folding charging into the existing car scheme by default. In practice, this means:
Reviewing whether the current mileage reimbursement reflects actual charging behaviour
Asking drivers directly where and how they charge, rather than assuming
Adding a salary sacrifice charging benefit as a bolt-on to the existing scheme
Positioning this to HR and fleet managers as financial wellbeing support, not a fleet cost line
Key Takeaways
Employers are auditing real charging costs instead of trusting the AER
Business mileage and personal charging costs need separate solutions
More employers are treating 2026 as the year to add this benefit
Charging is increasingly treated as its own distinct benefit line
How Does Salary Sacrifice Charging Protect Employee Finances?
The Charge Scheme is the UK's first salary sacrifice benefit dedicated to EV charging, and the only charging card integrated directly with a salary sacrifice arrangement. It closes the personal charging cost gap without touching existing fleet, lease, or company car arrangements.
How Does The Charge Scheme Work?
Employees pay for home, workplace, and public charging from gross salary, before Income Tax and National Insurance:
Charge as normal. Use The Charge Scheme card or app for public charging, or plug in as usual at home or work
Submit a mileage reading. This takes roughly 10 seconds a month
Costs are calculated automatically across home, work, and public charging
The deduction is applied through payroll, before tax and National Insurance
What Does This Actually Mean Financially?
Basic rate taxpayers save around 32% on every charge
Higher-rate taxpayers save around 42% on every charge
Additional rate taxpayers save up to 50% on every charge
For a driver relying entirely on public rapid charging because they have no home charger, this saving lands exactly where the hidden cost hits hardest. The scheme covers over 76,000 public charge points, including the rapid and ultra-rapid networks where the AER gap is widest, and carries no Benefit-in-Kind tax on employer-provided charging when structured correctly.
Key Takeaways
The Charge Scheme is the UK's first salary sacrifice charging benefit
Charging costs are deducted from gross salary before tax and NI
Savings range from around 32% to 50%, depending on the tax band
No changes are required to the existing fleet or company car arrangements
Example: A Typical Company EV Driver With and Without the Benefit
Consider a company EV driver without home charging access, covering an illustrative 8,000 personal miles a year entirely on the public rapid network, using the verified 79p per kWh average and HMRC's own efficiency assumption of 3.59 miles per kWh.
| Without the scheme | With the scheme (basic) | With the scheme (higher) | With the scheme (additional) | |
|---|---|---|---|---|
| Charging cost | ~£1,760 | ~£1,197 | ~£1,021 | ~£880 |
| Saving | — | ~£563 | ~£739 | ~£880 |
This entire cost currently comes from take-home pay. None of it is covered by the AER, which applies to business mileage only.
What Does This Look Like On A Fleet Scale?
For a fleet of 50 drivers without home charging, the same fleet driver running cost gap scales accordingly:
| Tax band | Total annual saving across 50 drivers |
|---|---|
| Basic rate (~32%) | ~£28,150 |
| Higher rate (~42%) | ~£36,950 |
| Additional rate (up to 50%) | ~£44,000 |
This covers personal mileage only. The business mileage AER gap sits on top of this and is addressed separately, typically through structured mileage reimbursement tools.
Figures are illustrative, based on verified June 2026 public charging and salary sacrifice rates. Actual results depend on mileage, charging behaviour, and tax band.
Key takeaways
A driver without home charging can face roughly £1,760 a year in costs
None of the personal charging costs are covered by mileage reimbursement
A 50-driver fleet could save £28,000 to £44,000 a year combined
Savings scale with tax band, but benefits every driver on the scheme
A Short HR Checklist For Protecting EV Driver Wellbeing
Ask drivers where they charge. Home, workplace, or public access changes the cost picture entirely
Check whether your AER reimbursement reflects real charging costs, particularly for drivers relying on rapid networks
Identify drivers without home charging access. This group carries the largest hidden cost burden
Separate business mileage reimbursement from personal charging support. They need different fixes, and tools such as Reimburse can help close the business mileage side specifically
Add a bolt-on salary sacrifice charging benefit to protect personal charging costs without disrupting fleet arrangements
Communicate the benefit clearly to existing company car drivers, many of whom won't realise a gap exists until it's pointed out
Frequently Asked Questions About Hidden Company EV Running Costs
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Not universally, but drivers without home charging access can face real shortfalls. Petrol's Advisory Fuel Rate sits between 14p and 26p per mile, depending on engine size, while EV drivers relying on rapid public charging face actual costs of around 22p to 25.6p per mile against a 15p AER reimbursement.
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The employee does. The AER only covers business mileage up to its fixed rate. Any shortfall against actual rapid charging costs, plus all personal charging, comes from the driver's own take-home pay.
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Yes. The Charge Scheme covers home, workplace, and public charging, including the 76,000+ public charge points across major UK networks, all paid through gross salary deduction.
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No. The Charge Scheme is designed for company EV drivers and salary sacrifice car scheme participants, not personally owned vehicles outside these arrangements.
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Frame it around the gap this article describes: charging costs the company mileage system wasn't built to fully cover, particularly for drivers without home charging. Most employees recognise the problem once it's named.
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Not usually. The employee funds the benefit from gross pay, and the employer recovers National Insurance savings, typically around 15%, on the sacrificed amount. Most sustainable benefits, including salary sacrifice charging and Cycle to Work, are cost-neutral or cost-positive to run, with season ticket loans the main exception.
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No. The Charge Scheme is a bolt-on benefit that sits alongside existing fleet, lease, and payroll arrangements, with no changes required to how vehicles are procured or financed.
Protecting Company EV Drivers From Costs You Can't See
Company EV running costs don't stop being real just because they're hard to track. The AER wasn't built to reflect rapid charging prices, VAT still favours home charging over public, and personal mileage sits entirely outside the reimbursement system. For drivers without a driveway, these gaps compound into a genuine, ongoing cost most fleet reporting doesn't capture.
Salary sacrifice charging bolts on to what's already in place and gives finance and payroll teams full visibility of a cost that was previously invisible. If your organisation has a company EV scheme and hasn't reviewed how drivers are actually charging, learn more about The Charge Scheme before it shows up as a retention issue rather than a benefits one.
Last updated: 09/07/2026
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