You drive two cars for the same job, driving 3000 miles with Car One and 6000 miles with Car Two. HMRC outlines mileage reimbursement rates for electric cars By Natalie Middleton / 5 years ago / Latest News / No Comments HMRC’s decision not to recognise electricity as a fuel has been cited by some organisations as a reason for them not to introduce 100% electric vehicles to their fleets. The changes to the taxation of employee benefits from 6 April 2017 which largely removed the income tax and employer NIC advantages of optional remuneration arrangements such as salary sacrifice (see here ) do not apply to ultra-low emissions vehicles . Electric cars - personal mileage claims. I am considering purchasing an Electric Car. Overall, this means that although buying an electric car can be expensive in the first place, in the long-term they can be a cheaper alternative to petrol or diesel cars. However, if an employer wants to use them, then they only apply where the employer: reimburses employees for business travel in their company cars; or; requires employees to repay the cost of fuel used for private travel in those company cars. HMRC approved mileage rates from 1 September 2018. The advisory electricity rate for fully electric cars is 4 pence per mile. Whilst the grant can’t be used for used vehicles, there are grants available for other types of vehicle, such as vans and motorcycles. Rates per mile which end in 0.5 are rounded down to the nearest whole penny for the advisory fuel rate when the underlying unrounded figure ends in a number less than 0.5 (for example 0.487). Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates. The same 45p per mile for first 10k then 25p a mile thereafter applies. The Advisory Fuel Rate is based on the engine size and fuel type of your car. However, if an employer pays a higher rate than the recommended HMRC mileage rates for electric cars (AER), they must be able to prove that the electricity cost per mile is higher. The advisory fuel rates for petrol, LPG and diesel cars are shown in these tables. It just covers the cost of owning and running a vehicle, including VED tax, MOTs and repairs. HMRC publish advisory fuel rates, the rate for electric cars is 4ppm. Results from an investigation by the RAC Foundation, which considered the mileage recordings of cars at their first MOT date when odometer readings have to be submitted, found some interesting facts about average electric car mileage. You must not use these rates in any other circumstances. You may be able to claim tax relief if you use cars, vans, motorcycles or bicycles for work. Q - Which car mileage allowance rates should apply to hybrids? I do approximately 8,000 miles on business and about the same for personal use. Your employee travels 12,000 business miles in their car - the approved amount for the year would be £5,000 (10,000 x 45p plus 2,000 x 25p). What Is the Mileage Rate for Electric Cars? Don’t worry we won’t send you spam or share your email address with anyone. HMRC outlines mileage reimbursement rates for electric cars. However, with more than half (56%) of company car drivers unaware of HMRC rules on reclaiming business mileage, this blog aims to clarify claim allowances and eligibility. HMRC fuel advisory Suggests . For example, if an employee travels 8,000 business miles in their fully electric company car, they can receive £320 in mileage for the tax year free of tax or NIC The advisory fuel rates from 1 September 2020 have been added. Consequently, many people decide to use their own car and claim a mileage allowance instead. Talk to us and we can help you prepare your tax return and advise you on the best options for deferred payments. They will cost less to run, are more environmentally friendly and they are significantly more tax efficient. HMRC calls this rate the Advisory Electricity Rate (AER). There will be no fuel benefit charge if you correctly record all private travel mileage and use the correct rate (or higher), to work out how much your employees must repay you for fuel used for private travel. Check price list, mileage, reviews & images of battery cars at CarDekho 4th Dec 2020. HMRC has announced the introduction of an advisory fuel rate for 100% electric cars from September 1 at 4p per mile. HMRC will introduce an advisory fuel rate (AFR) for pure electric cars from September 1 at 4 pence per mile (ppl). Categories. In his March 2020 Budget, Chancellor of the Exchequer Rishi Sunak confirmed that motorists buying electric cars would continue to benefit from the Plug-In Car Grant (to 2022-2023), but it would reduce from £3,500 to £3,000, and cars costing £50,000 or … You’ve accepted all cookies. Well, AMAP is not fuel dependent. This does not include travelling to and from your work, unless it’s a temporary place of work. To help us improve GOV.UK, we’d like to know more about your visit today. © 2018 RJP LLP is registered in England & Wales. Didn't find your answer? Electricity is not a fuel for car fuel benefit purposes. The latest petrol and diesel prices are taken from the Department for Business, Energy and Industrial Strategy and the LPG (UK average) is from the Automobile Association website. Mileage allowance guide; Mileage allowance for self-employed . Registered office address: 2 AC Court, High Street, Thames Ditton, Surrey KT7 0SR. And this is explained in more detail below. Recently released draft HMRC guidance sheds more light on the tax treatment when an employee charges their own electric car at work, but the treatment of business mileage payments relating to electric cars continues to leave many in the dark . The Advisory Electricity Rate (AER) will be available alongside current AFRs for petrol, diesel and LPG cars when the next AFRs are published. Company cars and using the advisory fuel rate. The rate for subsequent miles is 25p per mile. Brexit and the impact on VAT. If your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates, you can use your own rates to reflect your situation. VAT Domestic Reverse Charge: How will it impact the construction industry? Hybrid or range-extender company cars will have the appropriate HMRC rates applied depending on whether they’re diesel or petrol. Advisory fuel rates from 1 December 2020 View more . This confusion has arisen largely because HMRC’s advisory fuel rates, or approved mileage allowance payments, only cover petrol and diesel cars. Earlier this year, the Government revealed electric vehicles will be exempt from company car tax in the 2020/21 tax year. This article explains the tax implications of using vehicles at work, whether they are petrol or diesel cars or electric/hybrid. For cars, the maximum grant available is £3,500, which is deducted by the dealer or manufacturer at the point of sale. Will I be able to claim 45p per mile as I do currently for my Diesel car or will there be a new allowance set as there has been for Company Car mileage? HMRC's guidance does not address what is accepted to be making good in full where the car is a hybrid car. Summary of Electric Car Tax Benefits. But perhaps it’s more informative to look at your actual average mileage if you are considering an electric car. £1m capital allowances extension available for another 12 months. These Advisory Fuel Rates are also used to calculate the fuel portion of a mileage claim. You can change your cookie settings at any time. By Natalie Middleton / 5 years ago / Latest News / No Comments. If you have an electric car as a company car, the advisory electricity rate is 4p per mile. Email (will not be shown) Notify me when people reply Login / Register. Related articles. 7th Dec 2020. Approved Mileage Allowance Payment (AMAPs) - electric and hybrid cars are treated in the same way as petrol and diesel cars. The advisory electricity rate for fully electric cars is unchanged at 4p per mile. Fuel Duty ATT Technical Officer Date published June 12, 2018. Tax: rates per business mile. HMRC Fuel Rates. Sun Motors compares official range numbers to the latest real-world mileage tests on a selection of electric cars. When the advisory fuel rate is paid to employees for petrol or diesel the VAT element (1/6th) of the rate can be claimed back provided sufficient receipts are provided by the employee showing sufficient VAT has been incurred. Advisory Fuel Rates (AFR’s) should be used to re-imburse business use company car mileage. As a milestone decision, this is the first opportunity for company cars to be taxed at 0% as a benefit in kind (BIK), helping businesses make the transition to zero emission vehicles and a potentially emission-free future. 5. 15th Jan 2021. HMRC recommends plug-in hybrid and hybrid car drivers use AFRs according to the amount of fuel the engine uses. Although the tax on company cars has risen steadily over the years, they remain incredibly popular in the UK. When employees are reimbursed for business travel in their company cars, HMRC will accept there is no taxable profit and no Class 1A national Insurance to pay. Passenger payments - cars and vans 5p per passenger per business mile for carrying fellow employees in a car or van on journeys which are also work journeys for them. Latest Any Answers . Due to HMRC not recognising electricity as a fuel, organisations have pulled the plug on introducing 100% electric vehicles to their fleets. Conclusion: The Most Cost-Effective Cars for Your Business AFRs for electric cars. Electric cars need mileage rate support. Some confusion has been reported over how businesses should calculate mileage expenses rates for electric and hybrid company cars. Since the total mileage does not exceed 10,000 miles, you can be reimbursed at 45p per mile for your total mileage. HMRC have announced that from 1 September 2018 a new Advisory Fuel Rate (AFR) of 4 pence per mile will apply for fully electric company cars. Some companies have facilities for tax-free charging of electric car batteries at work and this facility can be provided as well as the reimbursement of business mileage using an AFR. If you’re working out business mileage based on a personal electric vehicle, or if you're claiming for your home office, the full AMAP allowance can be claimed. Hybrid or range-extender company cars will have the appropriate HMRC rates applied depending on whether they’re diesel or petrol. 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