Home Charging for Fleets and the VAT cut
TL;DR
With domestic electricity VAT dropping to 0%, home charging is officially the most cost-effective way to power your EV fleet, helping lower your Total Cost of Ownership (TCO) even further. However, relying on HMRC’s flat Advisory Electricity Rate (AER) often leaves you overpaying drivers on cheap tariffs or shortchanging those on standard rates.
Reimbursing the actual kWh cost is the fairest, smartest approach. Octopus Fleet Home Reimbursement handles this automatically on any home energy tariff, crediting drivers directly down to the penny. Combined with our public charging network, Visa-backed Fleet Card for petrol/diesel cars, and Business Payments Card for team spend, we bring your entire fleet under one refreshingly simple roof.
Read on below 👇
If you manage a fleet, you’ve probably heard the news that domestic electricity VAT is dropping to 0%.
For your drivers plugging in on their driveways, charging an EV at home is about to get even cheaper. That’s fantastic news for your Total Cost of Ownership (TCO). But for fleet managers handling reimbursements, tracking expenses, and dealing with public charging at 20% VAT, it also opens up a bit of a tax maze.
Let’s break down what this means for your fleet:
0% at Home vs. 20% on the Road
Now that the new 0% domestic rate takes effect on the 1st of October, it impacts the price gap between charging at home and charging in public:
Home Charging (0% VAT): No tax on domestic power means home charging is officially the cheapest way to keep your fleet moving.
Public Charging (20% VAT): Public charge points are still classed as commercial services, carrying standard 20% VAT.
While industry groups keep lobbying for equal tax rates on public chargers, fleet managers are left managing two completely different payment worlds. Encouraging home charging saves your business money, but it can be hard for businesses to know the best way to manage home charging reimbursement.
AER vs. Actual kWh Reimbursement
When it comes to paying drivers back for home charging, there are two options: stick to the flat Advisory Electricity Rate (AER) (currently 7p per mile) or reimburse the actual kWh cost.
On paper, a flat 7p rate sounds pretty straightforward. But in reality, there’s a risk of someone being shortchanged.
Here’s an example:
Scenario A: The Smart Tariff Driver. If your driver is on an off-peak home tariff paying ~7p per kWh overnight, driving an efficient EV (say, 4 miles per kWh) costs them around 1.75p per mile. Reimbursing them at the 7p AER means you're overpaying by 5.25p every single mile. Multiply that across a fleet of 50 cars doing 15,000 miles a year, and your business is overpaying by nearly £40,000 annually.
Scenario B: The Standard Tariff Driver. On the flip side, if a driver charges on a standard daytime flat rate (around 26p per kWh), their real cost is ~6.5p per mile. On occasion, when battery performance is impacted by things like cold weather, their real cost could jump to 8.5p+ per mile. Reimbursing them at 7p means they are personally subsidising your company travel, which is far less than ideal.
Why actual kWh reimbursement wins
Paying for exact kWh usage removes the guesswork completely. Your drivers never end up out of pocket, and your business saves by not overpaying on flat rate repayments.
With Octopus Fleet Home Reimbursement, you don't have to choose between simplicity and accuracy. We pull the exact tariff data and kWh consumed, calculating the precise cost to the penny, so once drivers let us know which sessions were business-related, they get credited automatically back to their energy accounts.
How to get it right
Reimbursing employees for charging company vehicles at home can be simple.
Enter Octopus Fleet Home Reimbursement 🏠
We built a home reimbursement solution that cuts out the paperwork entirely:
Any Tariff: Your drivers don't need to switch energy suppliers. They can charge on any home tariff.
Exact-Cost Calculation: Our platform tracks actual kWh used, and once your drivers let us know which sessions are business-related, our tech calculates the precise cost down to the penny.
Direct Credit: We reimburse the driver by crediting their home energy account directly.
Bridging the Gap: A Truly Holistic Fleet Strategy
A modern fleet isn't all-electric overnight, and it definitely doesn't charge in just one place. You need a setup that handles home charging, on-the-go public charging, legacy fuel, and day-to-day team expenses without requiring four different software subscriptions.
Here’s how Octopus Fleet brings it all under one roof alongside home charging reimbursement:
⚡ Public Charging: For the times your drivers do need public charging, give them access to 1.4+ million chargers across the UK and Europe. Every session is rolled into one single, HMRC-compliant VAT invoice. Plus, we have discounted CPO subscriptions to unlock more savings!
⛽ The Fleet Card: Still running a mixed fleet of EVs, petrols, and diesels while you transition? Our Visa-backed fuel card lets you manage legacy fuel spend alongside your electric vehicles.
💳 The Business Payments Card: From hotels and tolls to parking and meals, give your team a dedicated card for everyday fleet spend with live expense tracking built right in.
Keeping it simple
Tax rules change, tariffs shift, and the transition to electric has plenty of moving parts, but keeping your vehicles charged and your team never out of pocket is where we can help.
Whether your drivers are plugging in on their driveway at 0% VAT or topping up on the public network, Octopus Fleet gives you complete visibility, automatic expense handling, and total transparency.
Ready to see how easy fleet electrification can be?
Frequently asked questions
Why shouldn't I just use HMRC’s flat Advisory Electricity Rate (AER) to pay drivers back?
With drivers on vastly different energy tariffs, from cheap overnight smart rates to standard daytime rates, a single flat p/mi rate means you’re either overpaying by thousands of pounds a year or leaving your drivers out of pocket. Paying the actual kWh cost is fairer for everyone and far better for your bottom line.
Do my drivers need to switch to Octopus Energy to use Home Reimbursement?
Not at all! We love having people on our energy tariffs, but your drivers can be on any home energy supplier or tariff. Our tech still tracks exact kWh usage and calculates the true cost to the penny, crediting their existing home energy account directly.
Does the 0% domestic VAT rate apply to public charging as well?
Sadly, no! The 0% VAT rate only applies to domestic home energy. Public charge points are still classed as commercial services and carry 20% VAT. That’s why encouraging home charging is the ultimate way to lower your Total Cost of Ownership (TCO).