Aug 8, 2018 - 03:03 pm

HMRC sets mileage reimbursement rates for electric cars


The British tax service HMRC has specified mileage reimbursement rates for electric cars. The new rate will be at 4 pence per mile for EVs from September, 1. This follows campaigning from fleet representatives and translates into a tax advantage.

The new rate, called the Advisory Electricity Rate (AER), has been set at 4p per mile and will be published alongside AFRs for petrol, diesel and LPG (liquefied petroleum gas) cars based on engine size. Plug-in hybrid and hybrid cars will continue to be treated as either petrol or diesel models.

AFRs apply where employers reimburse employees for business travel or require employees to repay the cost of fuel used for private travel. They are deemed to be tax and National Insurance-free, hence why the new ruling is important.

Says HMRC: “HMRC will accept that if employers pay up to the Advisory Electricity Rate of 4p per mile when reimbursing their employees for business travel in a fully electric company car there is no profit – there will be no taxable profit and no Class 1 National Insurance to pay.”

It is also in line with an expected surge in plug-in vehicles operated by fleets. The British Vehicle Rental and Leasing Association (BVRLA) has launched the ‘Plug-in Pledge’ this July, aiming to raise the number of PEVs in their fleets from 50,000 today to 720,000 by 2025.

This target may even be achievable. The association’s members oversee almost five million vehicles on British roads. Add to this their combined buying power and the frequency of fleet replacement cycles, and they can indeed become a key driver on the journey to zero emissions.

The latter has been outlaid in the UK government’s Road to Zero strategy. It also feeds into the latest numbers of the Go Ultra Low campaign. They see an upward trend for electric and plug-in hybrid car sales in the UK. In the first half of this year, they counted one plug-in vehicle being registered every 9 minutes reportedly.


2 Kommentare zu “HMRC sets mileage reimbursement rates for electric cars

  1. Clive Johnson

    This has caused some confusion. Can anyone advise if this rate is applicable only to company cars, or whether it is applicable to private cars occasionally used for work purposes. The reason I ask is I find it extraordinary that my wife has just bought a £33000 EV, to find that she can only claim 4p a mile while her work mates can claim 40p plus in a petrol car. 4p won’t even cover wear and tear.

  2. christine bryan

    In the Environment Agency we appear to have only 1 rate for electric cars and hybrid cars regardless of whether it’s private business use or lease. The other problem I have is that they continue to only pay 4ppm regardless of the hike in electricity prices. It’s costing some staff twice this price as their electricity has more than doubled recently. The Environment Agency simply say they are following HMRC guidelines, leaving their already underpaid staff to subsidise Agency mileage. Simply squeezing the lemons till the pips squeak.

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08.08.2018 15:18