Electric car mileage rates: What do I need to know?
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If you’ve ever driven a petrol or diesel vehicle for business purposes, you’ll be familiar with the entitlement to claim back the mileage from your employer for the distance travelled. The idea is that this mileage claim should cover some of the costs associated with fuel, the wear and tear on the vehicle, and other running costs while doing journeys as a requirement of the job..
But how does this work with electric cars? Do the same rules apply to electric car mileage rates as they do with petrol and diesel vehicles?
In this guide, we look at the mileage rates for electric cars and how this works differently from petrol, diesel and hybrid cars, based on the car’s ownership and other specific circumstances.
Claiming mileage for electric cars that are privately owned
If you own an electric vehicle, or lease one on a personal EV lease, but also use it for work purposes, your employer is able to reimburse you using Mileage Allowance Payments (MAPs). There is a HMRC-approved business mileage rate and allowances advisory that employers can use for employees driving their own electric car for work.
At the time of writing, this rate is the same for electric cars as it is for petrol and diesel vehicles:
- 45p per mile for the first 10,000 business miles driven in a year
- 25p per mile for any more miles driven above the first 10,000 miles.
An example is if you drive 15,000 business miles in a year for your employer in your own electric car, you can claim back £4,500 for the first 10,000 miles and another £1,250 for the other 5,000 miles driven. This adds up to a total of £5,750 that you can claim back.
How the mileage claim process works can depend on the employer, but it’s common practice for employers to allow claims on mileage for electric cars every month or every quarter (there will usually be a cut off date provided). This means that those driving their personal EV for work can make several claims throughout the year rather than waiting until the end of the year to make a larger claim.
Claiming mileage for electric cars that are owned by the business
If the electric car is a company car owned or leased by the employer, the mileage claim rate is different. The HMRC advisory fuel rate for EVs applies to those employees using company electric cars, and can only be claimed on miles driven for business purposes. Any personal driving using a company electric car cannot be included on a claim.
The HMRC advisory rate is revised every four months on 1st March, 1st June, 1st September and 1st December each year. At the time of writing (October 2024), this rate is 7p per mile.
FAQs on electric car mileage rates
Do employers have to pay the HMRC advisory rates for EV mileage claims?
The HMRC rates for mileage or fuel are not binding for employers, but by reimbursing employees at the stated rates or below, there is no tax or national insurance liability for the mileage claim for the employer to pay.
However, if there is a car allowance paid to the employee and the employer pays less than the HMRC advisory rate, there will be Class 1 National Insurance contributions (NICs) due on the car allowance, minus the business electric car mileage paid to the employee.
If employers choose to pay less than the current rates, the employee is able to claim tax relief from HMRC on the unused balance (known as Mileage Allowance Relief, or MAR) at the end of the tax year, and will need accurate records of all of their business journeys to do so.
Can employees claim electric car mileage rates for their commute to and from work?
Commuting to and from a regular place of work is not claimable for business miles. This is because commuting is considered a personal journey.
However, if you are required to travel to other locations, such as a temporary workplace, a meeting in another location or driving between work locations, that is usually classed as business mileage and can be included on a claim.
Can you claim a higher mileage rate with an electric car if you take a work passenger?
When claiming electric car business miles, employees can claim an additional 5p per mile for each work colleague their vehicle carries on the work-related journey. So, with a work journey where three passengers accompany the driver, that’s an extra 15p per mile that can be claimed.
As with standard business miles claimed back by employees, this passenger allowance is tax-free.
Is the mileage rate for electric cars taxable?
If the employer pays the employee for their business mileage in their electric car at the HMRC advisory rate or below, then there is no tax to or NICs to pay on the money claimed.
However, if they choose to pay employees at a higher rate, then anything paid above the standard rate is considered taxable income by HMRC for business miles.
Some businesses also reimburse employees for personal mileage (which will usually include commuting), as an employment perk. However, this mileage claim would be subject to tax.
Can you claim business mileage if the employer provides free workplace EV charging?
There can be some confusion over whether employers should reimburse electric car driving employees for their business miles if they already offer free EV charging at the workplace.
This is down to individual company policy and the circumstances involved. It may be the case that the charging setup at work will not enable all employees with electric cars to charge at the same time, or the vehicles might not be at the workplace location for long enough to add many miles to the car’s range. In these situations, employers can choose to reimburse their EV driving employees for business miles travelled, especially if the employee is driving their own electric car for business purposes, as MAPs are designed to pay a contribution to other running and maintenance costs, as well as just fuel.
If a company electric car is able to charge fully at work, with no cost to the employee, then employers are unlikely to pay the employee mileage reimbursement in this situation, unless their work journey will be a greater distance than the electric car’s range.
On similar lines, if the employer provides charging cards or a monthly charging allowance to the employee for charging up their electric company car at home or on the public network, it’s unlikely that they will reimburse business miles for an EV that the business owns or leases, unless they have a policy that states otherwise.
As an employee, it’s always important to check your employer’s policy for EV business mileage claims when you start working there or before you get an electric car.
If you are an employer considering offering electric company cars to your employees for use at work, we can help you find the best option for your business, whether that’s through business EV leases or an electric car salary sacrifice scheme.
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