Welcome to our review of the current HMRC electric car mileage rates.
The 2023 HMRC electric car mileage rate is 9p for company cars. If you are driving a personal electric car for business purposes, the mileage rates are 45p for the first 10,000 miles and 25p thereafter.
In this article, we’ll take an in-depth look at these HMRC electric car mileage rates and the various rules on claiming EV-related mileage expenses. Providing you with an understanding of how HMRC electric car mileage rates impact expense reimbursement and tax calculations.
What are the current HMRC electric car mileage rates?
The current HMRC electric car mileage rate is 9p for company cars. This is the Advisory Fuel Rate (AFR) set by HMRC to help employers determine the mileage costs when driving company cars for business purposes.
When driving a personal EV for business purposes the milage rate is determined by HMRCs Approved Mileage Allowance Payments (AMAP) and follows the same rules as petrol and diesel cars – 45p for the first 10,000 miles and 25p thereafter.
What is an Advisory Fuel Rate (AFR)?
An Advisory Fuel Rate (AFR) is a guideline set by HMRC in the United Kingdom. AFRs are used to determine the reimbursement or allowance for employees who use electric company cars for business purposes and need to claim back the cost of fuel.
The mileage rate that you are able to claim is determined by the Advisory Fuel Rate (AFR) set by HMRC. HMRC reviews and updates the AFRs quarterly, this allows them to keep up with changes in fuel prices and vehicle efficiency. If there are significant changes in fuel prices or other relevant factors, HMRC may adjust the AFRs accordingly.
The advisory fuel rate rate for electric cars is currently 9p.
The AFR is a pence-per-mile rate that represents the average fuel costs, including the cost of fuel and associated running expenses such as servicing, maintenance, and depreciation. The purpose of AFRs is to provide a standard mileage reimbursement rate that employers can use when reimbursing employees for business travel, rather than requiring detailed calculations for each trip.
What are Approved Mileage Allowance Payments (AMAP)?
Approved Mileage Allowance Payments (AMAP) determine the tax-free reimbursement or allowance that an employer can provide to employees who use their personal vehicles for business purposes.
AMAP rates apply to various types of vehicles, including electric vehicles (EVs). The rates are designed to cover the costs associated with business travel, such as fuel, vehicle wear and tear, and maintenance. The rates are meant to provide a standard and tax-free allowance for employees, and they are not intended to cover the full costs of vehicle ownership and operation.
For electric vehicles, the AMAP rates are the same as those for petrol and diesel vehicles. The current AMAP rates for business mileage are as follows:
- 45p per mile for the first 10,000 miles.
- 25p per mile for each additional mile driven beyond the initial 10,000 miles.
What’s the difference between AFR and AMAP?
AFR (Advisory Fuel Rates) and AMAP (Approved Mileage Allowance Payments) are two different systems used by HMRC to determine how much mileage expense an employee can claim.
Let’s look at the differences between the two:
- Advisory Fuel Rates (AFR) is specifically used for company-owned vehicles, either salary sacrifice EVs or company electric cars.
- Approved Mileage Allowance Payments (AMAP) applies to employees using their personal vehicles for business purposes.
AFR is primarily for company-owned vehicles and focuses on fuel reimbursement, while AMAP is for employees using their personal vehicles and can cover broader costs associated with business mileage. Both AFR and AMAP rates are advisory and provide standardised guidelines, but employers have the flexibility to deviate from these rates if they can justify their own rates as reasonable.
What are the HMRC mileage rates for Hybrid cars?
HMRC treats hybrid cars the same as any comparable petrol or diesel vehicle, it is split between the AFR and AMAP rates as follows:
The AFR rates for hybrids cars
|Engine size||Petrol — rate per mile||Diesel — rate per mile|
|1400cc or less||13 pence||13 pence|
|1401cc to 2000cc||15 pence||15 pence|
|Over 2000cc||23 pence||20 pence|
The AMAP rate for Hybrid cars
The AMAP rate for Hybrid cars is the same as any other petrol, diesel or electric vehicle. It is 45p for the first 10,000 miles and 25p thereafter.
Can a business decide what its own electric car mileage rates are?
It is possible for a business to decide its own electric car mileage rates, however, there are implications in choosing your own rates instead of following HMRC guidelines:
If a business sets rates higher than the HMRC guidelines, the extra amount may be subject to tax and national insurance contributions.
If a business sets a mileage rate lower than the HMRC guidelines then employees are able to claim marginal allowance tax relief on the shortfall.
Setting their own mileage rates allows businesses to consider factors such as the cost of electricity, maintenance, and any other expenses associated with electric vehicles. However, it is important to ensure that the rates set are fair, reasonable, and based on accurate cost calculations.
When establishing custom mileage rates, businesses should keep proper documentation and records to support their decision and justify the chosen rates. It is recommended to consult with an accountant or tax professional who can provide guidance on establishing appropriate mileage rates and ensure compliance with tax regulations and reporting requirements.
Ultimately, while businesses have the freedom to set their own electric car mileage rates, it is crucial to ensure that the rates are justifiable, fair, and align with the actual costs incurred by employees when using electric vehicles for business purposes.
Can you claim EV mileage rates if you are self-employed?
If you are self-employed and use an electric car or electric van for your business, you can claim mileage expenses. Make sure you keep accurate records of your business mileage as you go alone, and note down the date, the purpose of the trip and how many miles were driven.
When filing your self-assessment tax return, you can include the mileage expenses as allowable business expenses to reduce your taxable income.
What are ‘allowable expenses’?
Allowable business expenses are costs that a self-employed person or a business is allowed to submit on a tax return. These expenses must be completely related to the operation of the business and must be considered necessary for the business to run.
Examples of allowable business expenses are Office costs, Staff Costs, Marketing Costs and Travel expenses. Allowable travel costs can include electric vehicle expenses, electric vehicle mileage allowances and EV parking fees.
Can employees claim mileage for charging a company car at home?
Employees who charge an electric car with their home EV charger can be reimbursed for the electricity cost of a company EV provided it is related exclusively to business travel. Employers can use the HMRC’s Advisory Fuel Rate (ARF) to calculate the reimbursement amount, this is currently 9p for electric vehicles.
Can you use the electric car mileage allowance for your own EV?
You can use the electric car mileage allowance for your own electric vehicle provided you are using it for business purposes. If you are using your personal electric car for work-related travel, you can claim the mileage using the HMRC’s Approved Mileage Allowance Payments (AMAP) system.
Do the HMRC electric car mileage rates apply to all types of electric vehicles?
The HMRC electric car mileage rates apply to all types of electric vehicles; cars, vans and electric lorries provided they are fully electric zero-emission EVs. Hybrids are subject to the same mileage rates as equivalent petrol or diesel vehicles. The mileage rates set by HMRC generally provide standard rates for reimbursement or tax-free allowance based on the number of miles driven for business purposes, regardless of whether it’s a fully electric vehicle or a hybrid.
Are there any limitations on the distance covered by electric car mileage rates?
There are no limitations on the total distance covered by electric car mileage rates, providing the miles driven are exclusively for business purposes. However, there is a tier in place between the number of miles driven within a single tax year:
- 45 pence per mile for the first 10,000 business miles in a tax year
- 25 pence per mile for any business miles beyond 10,000 in the same tax year
How do the HMRC electric car mileage rates affect company car tax?
The HMRC electric car mileage rates do not directly affect company car tax, as they serve totally different purposes. Company car tax, also known as Benefit-in-Kind (BiK) tax, is a tax charged on employees who receive a company car for both business and personal use.
The tax is based on the vehicle’s value, the level of its CO2 emissions, and the employee’s income tax bracket.
AMAP rates are used for reimbursing employees who use their personal electric vehicles for business travel, AFR rates are for reimbursing employees recharging electric company cars, and neither impact the BIK rate for payable on company car tax.
What counts as business mileage?
Business mileage should be miles travelled that are specifically for work-related purposes, and not for personal or commuting mileage. It is important to know that commuting between home and work is not considered business mileage. Here are some examples of what is considered ‘business mileage’:
- Driving between various job sites or offices during the course of your working day
- Travelling to and from client meetings or work-related appointments that are not at your normal workplace
- Attending conferences, training sessions, or any other business events related to your job.
- Deliveries or collections, traveling to deliver goods or collect supplies, materials, or equipment for your business.
Is car insurance included in the mileage allowance?
No, electric car insurance is not typically included in the mileage allowance. The mileage allowance is meant to cover the costs associated with business travel, including fuel, vehicle wear and tear, and maintenance.
Car insurance is a separate cost that is not typically included as part of the mileage allowance or reimbursed separately based on business mileage.
How do you submit mileage to HMRC?
The process of submitting mileage claims to HMRC depends on whether you are an employee or self-employed.
If you are an employee and need to claim mileage you should submit your mileage claims to your employer, not directly to HMRC. Your employer will then reimburse you for the business miles you have driven.
If you are self-employed you just need to include the mileage claim when filing your Self Assessment tax return.
Here’s the steps you can take to submit your mileage:
- Keep Detailed Records
Maintain accurate and detailed records of your business mileage, including the date, purpose of the trip, starting and ending locations, and the number of miles traveled. This documentation is crucial for substantiating your mileage claims.
- Calculate Mileage Expenses
Use the applicable mileage rates provided by HMRC to calculate your mileage expenses. This can be the Approved Mileage Allowance Payments (AMAP) rates for self-employed individuals or the company’s own rates if you are an employee. Multiply the number of business miles by the relevant mileage rate to determine the amount to claim.
- Complete Self-Assessment Tax Return or Expense Claim Form If you are self-employed, include the mileage expenses on your self-assessment tax return. Fill in the appropriate sections or boxes that relate to business expenses and provide the necessary details and calculations for the mileage claim.
- Retain Supporting Documentation
Keep all supporting documentation related to your mileage claims, including mileage logs, receipts for fuel or other expenses, and any other relevant records. It is important to retain these documents as HMRC may request them for verification or audit purposes.
- Submit the Claim
Submit your self-assessment tax return with the mileage expenses included or submit your expense claim form to your employer according to their internal processes and deadlines.
How do you prove mileage to HMRC?
HMRC may audit your account and if so you will need to provide proof of your mileage submission. Make sure you record a log of every business trip and keep a spreadsheet of the following information:
- Date of the trip
- Purpose of the trip (e.g., meeting with a client, attending a conference, etc.)
- Starting and ending locations
- Total number of miles driven for the trip
- Any additional expenses related to the trip, if applicable (e.g., tolls, parking fees, etc.)
Keep any receipts or invoices related to the vehicle or travel expenses.
What happens if you lose the HMRC proof of mileage?
If you lose your proof of mileage and you get an HMRC audit, it can be difficult to substantiate your mileage claims. Here are a few steps that you could take that may help if you lose the proof of mileage:
Attempt to recreate the original mileage records, and use information from your calendar to help work log the business trips.
Check with work to see if your employer has a mileage reimbursement system in place, they may have records of your previous mileage claims.
Gather supporting documentation from your inbox, you might have travel receipts or documents such as hotel bookings or conference registrations in your email account.
If you do have to deal with an HMRC mileage audit, just be honest and provide all the information you have or can recreate. Don’t try and fabricate anything you cannot substantiate, honesty is likely to help mitigate potential problems with HMRC.
The final word on HMRC electric car mileage rates.
Understanding the HMRC rules relating to electric car mileage rates is essential for businesses, employees and self-employed individuals planning to claim mileage allowance on an electric company car.
The Advisory Fuel Rates (AFR) and Approved Mileage Allowance Payments (AMAP) provide guidance for company-owned and personal electric vehicles, respectively. These rates, along with considerations for company car tax and proper submission procedures, ensure accurate expense reporting and keep you on the right side of HMRC regulations.
Here is a final checklist to consider when claiming HMRC electric car mileage rates:
- The first step is to determine if you are claiming for AFR (Advisory Fuel Rates) or AMAP (Approved Mileage Allowance Payments)
- Work out the amount you are claiming with this simple formula: AMAP or AFR Rate X Mileage = Expense claim
- Submit your mileage to your employer, or if you are self-employed, include the mileage on your self-assessment tax return
- Maintain a log of business trips just in case of an HMRC audit, this allows you to prove your mileage claims
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John is the Editor and Spokesperson for Electric Car Guide.
With over 20 years of writing experience, he has written for titles such as City AM, FE News and NerdWallet.com, covering various automotive and personal finance topics.
John’s market commentary has been covered by the likes of The Express, The Independent, Yahoo Finance and The Evening Standard.