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What Mileage Rate can I Claim for my Electric or Hybrid Car?

23 March 2020
Slava Knazevs
Reducing Tax, Payroll, People

The Government is pressing ahead with its plan to ban all new non-electric cars from sale by 2035 at the latest, and many UK car buyers are already shifting towards electric and hybrid cars.

This trend is only going to accelerate in 2020 as supply increases, the choice of electric vehicles (EVs) widens and prices gradually fall. Electric cars are much cheaper to run and have lower maintenance costs in comparison to conventional petrol and diesel vehicles, so what mileage allowance can an employee claim for using their own electric or hybrid car for business purposes?

The good news is that tax free Approved Mileage Allowance Payments (AMAP) used to reimburse business mileage clocked up by employees in their own vehicle apply to any car or van and are not fuel dependent. Employees with electric cars can therefore claim exactly the same tax free Approved Mileage Allowance Payments (AMAPs) in the same way as for petrol or diesel cars:

  • 45p per mile for the first 10,000 business miles in the financial year and 25p per mile thereafter
  • Any reimbursement by the employer for business mileage is tax and NIC free provided it is no higher than the above AMAP rates
  • Reimbursements in excess of the above AMAP rates are taxable on the employee and must be reported to HMRC
  • If the employer reimburses at a rate lower than the AMAP rates, the employee can still claim tax relief from HMRC on the difference.

Please note that an employee may receive a taxable benefit in connection with their personal electric car if their employer:

  • Pays for a vehicle charging point to be installed at the employee’s home
  • Provides a charge card to allow access to commercial or local authority vehicle charging points
  • Pays to lease a battery for the employee’s car.

However there is no benefit-in-kind charge for employees charging their own cars at a workplace charging station as HMRC does not consider electricity to be a fuel.

If you have an electric car as a company car then the advisory electricity rate is 4p per mile. That means the company can pay the employee 4p per mile for every business mile travelled in the electric car without any tax consequences.

The content in this blog is correct as at 23 March 2020. See terms and conditions.

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