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. 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 … We use this information to make the website work as well as possible and improve government services. Here are five electric cars that have the best mileage, according to Kelley Blue Book. When it comes to company cars, the tax payable (classed as a benefit in kind or BIK) is more complicated. We use cookies to collect information about how you use GOV.UK. HMRC approved mileage rates from 1 September 2018. It just covers the cost of owning and running a vehicle, including VED tax, MOTs and repairs. 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? Advisory Fuel Rates (AFR’s) should be used to re-imburse business use company car mileage. What Is the Mileage Rate for Electric Cars? Summary of Electric Car Tax Benefits. The advisory fuel rates from 1 September 2020 have been added. Advisory Fuel Rates (AFR’s) should be used to re-imburse business use company car mileage. Electric cars need mileage rate support. Chances are, you already know the petrol and diesel IRS reimbursement rates like the back of your hand. 4th Dec 2020. Talk to us and we can help you prepare your tax return and advise you on the best options for deferred payments. Because of this, hybrid drivers have to work out their mileage claim using the Advisory Fuel Rate tables for petrol/diesel . Emma Rawson. Hybrid cars – those that are powered by both electric and internal combustion engines – are treated as petrol/diesel cars under the HMRC rules. 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 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. To help us improve GOV.UK, we’d like to know more about your visit today. Check how the new Brexit rules affect you. HMRC’s position is that as the car cannot move without a battery it is integral to the car. 5. 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. This tax year (from 6 April 2020) we have seen the introduction of tax exemptions on electric and low emission vehicles which is increasing the popularity of electric company cars. Don’t include personal or financial information like your National Insurance number or credit card details. HMRC don't have a different rate for electric vehicles. HMRC calls this rate the Advisory Electricity Rate (AER). The same 45p per mile for first 10k then 25p a mile thereafter applies. Well, AMAP is not fuel dependent. Where the: For liquefied petroleum gas (LPG), the MPG used is 20% lower than for petrol due to lower volumetric energy density. Some confusion has been reported over how businesses should calculate mileage expenses rates for electric and hybrid company cars. The Advisory Electricity Rate (AER) will be available alongside current AFRs for petrol, diesel and LPG cars when the next AFRs are published. You should also keep in mind that the HMRC rates don’t consider whether a driver mainly uses the electric motor or petrol engine. 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. Mileage Allowance Relief (MAR) - electric and hybrid cars are treated in the same way as petrol and diesel cars. Some confusion has been reported over how businesses should calculate mileage expenses rates for electric and hybrid company cars. Advertisement . Check the full list of vehicles eligible for the plug-in grant. Q - Which car mileage allowance rates should apply to hybrids? Latest Any Answers . Don’t worry we won’t send you spam or share your email address with anyone. Electricity is not a fuel for car fuel benefit purposes. The ‘rates per mile’ calculated in these tables are shown rounded to one decimal place, but the final advisory fuel rates are rounded to the nearest whole penny. 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). I know it says that electricity is not a fuel but it is considered so when paying for dual fuel gas and electric. The Miles Consultancy (TMC) has produced a guide showing how businesses can calculate mileage repayment rates for electric and hybrid company cars instead of using HMRC’s advisory fuel rates or approved mileage allowance payments, which only cover petrol and diesel cars 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. The all-electric Kia Soul has hurtled into the best mileage competition for 2020. TaxCalc. 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 Advisory Fuel Rate is based on the engine size and fuel type of your car. A) Taxes applicable to all ULEV users 1. © 2018 RJP LLP is registered in England & Wales. Usually where a car allowance is paid the employer will pay a lower rate on the basis that they are providing you with additional pay to provide your own car and all you need reimbursing for is the fuel for business mileage. Electricity is not a fuel for car fuel benefit purposes. The advisory fuel rates for petrol, LPG and diesel cars are shown in these tables. …but now pure electric cars pay no company car tax. This is important when claiming VAT on mileage expenses. If you are paid a car allowance from your employer, or by your company, then you can claim expenses based on one of the following methods: Claim the relevant advisory fuel rate or the approved mileage allowance payments based on the petrol or diesel engine ; Claim the first 20 to 30 miles of each trip using the cost of the electricity then pay the full advisory fuel rate for the remaining trip The advisory fuel rates are worked out from the fuel prices in these tables. Registered company number: OC323740. You can change your cookie settings at any time. You may be able to claim tax relief if you use cars, vans, motorcycles or bicycles for work. HMRC have however announced that, from 1 September 2018, a new AFR of 4 pence per mile will apply for fully electric company cars. Consequently, many people decide to use their own car and claim a mileage allowance instead. For cars, the maximum grant available is £3,500, which is deducted by the dealer or manufacturer at the point of sale. This confusion has arisen largely because HMRC’s advisory fuel rates, or approved mileage allowance payments, only cover petrol and diesel cars. Electric cars - personal mileage claims. Electricity is not a fuel for car fuel benefit purposes. By Natalie Middleton / 5 years ago / Latest News / No Comments. The advisory electricity rate for fully electric cars is unchanged at 4p per mile. Due to HMRC not recognising electricity as a fuel, organisations have pulled the plug on introducing 100% electric vehicles to their fleets. As long as the mileage rate used to pay employees for business mileage is less than or equal to the appropriate AFR then there is no taxable profit or Class 1A National Insurance to be paid. Related articles. The new rate means that HMRC will now accept that payments to employees of up to 4 pence per mile for business travel in a fully electric company car will not result in a taxable benefit in kind. They will cost less to run, are more environmentally friendly and they are significantly more tax efficient. The amount of the BIK applying to a company car depends on the CO2 emissions it releases. This follows campaigning from fleet representatives and … You drive two cars for the same job, driving 3000 miles with Car One and 6000 miles with Car Two. Categories. I am considering purchasing an Electric Car. Mileage allowance guide; Mileage allowance for self-employed . Advisory fuel rates from 1 March 2020 Authorised Mileage Allowance Payments (AMAPs), and, if the employer pays less than the published rates, may claim tax relief under Mileage Allowance Relief (MAR). The advisory electricity rate for fully electric cars is unchanged at 4p per mile. It will take only 2 minutes to fill in. The advisory electricity rate for fully electric cars is calculated using published consumption rates, adjusted to reflect real driving conditions and the average cost of electricity. With electric vehicles becoming a more practical choice for company fleets, the lack of clarity over electric car mileage allowances has made life difficult for employers and employees. Claiming mileage is relatively straightforward through an expenses claim. Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates. A - Use the relevant petrol or diesel figure. HMRC obliged and issued a new electric car business allowance called the advisory electric rate (AER). 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). £1m capital allowances extension available for another 12 months. AFRs are used when an employee is provided with a company car and there is a need: to reimburse the employee for business mileage, or 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. Example - tyres & insurance still need to be paid for. From 1st September 2018, employees driving on business in a pure electric company car can claim 4p per mile. Why? Q - Which car mileage allowance rates should apply to hybrids? Sage Accountants. 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. A company has an electric company car. With effect from 1 September 2018, the official mileage rate for electric company cars is 4 pence per mile. 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. You will not need to use the advisory rates where you can show that employees cover the full cost of private fuel by repaying at a lower mileage rate. To be eligible for mileage allowance under the AMAP rules, you must be using your own personal vehicle; e.g. 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. If you pay rates that are higher than the advisory rates but cannot show the fuel cost per mile is higher, there will be no fuel benefit charge if the mileage payments are only for business travel. Search AccountingWEB. Here is a worked example of the tax payable on a company car to illustrate how the calculation is achieved: Car tax band: 28% - based on level of emissions and cost, Taxable benefit in kind: 28% x 20,000 = £5,600, BIK tax payable by a basic rate taxpayer = £1,120, BIK tax payable by a 40% rate taxpayer = 2,240. It applies to cars that are privately owned and to company cars, provided that the charging facility is located “at or near the workplace” and is available for all employees to use. HMRC Fuel Rates. You must not use these rates in any other circumstances. Car and van mileage allowances . HMRC has announced the introduction of an advisory fuel rate for 100% electric cars from September 1 at 4p per mile. Alternatively, HMRC allows employers to use their own mileage rate if certain conditions are met. Company cars and using the advisory fuel rate. Tax: rates per business mile. The sale of electric and hybrid cars have seen a massive boom over the last couple of years. What are the tax free rules for a Covid Christmas? 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. VAT Domestic Reverse Charge: How will it impact the construction industry? Because of this, hybrid drivers have to work out their mileage claim using the Advisory Fuel Rate tables for … HMRC calls this rate the Advisory Electricity Rate (AER). The maximum relief for NIC is always 45p per business mile. HMRC recommends plug-in hybrid and hybrid car drivers use AFRs according to the amount of fuel the engine uses. Here’s more on how to claim MAR. 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. And when employees drive their company car on private journeys, they will use the AER to repay the cost of electricity at 4p per mile. Fuel Duty HMRC specifies that the 45 pence per mile (or the 25 pence per mile) is meant to cover expenses beyond fuel, such as fixed expenses (insurance, road tax, depreciation) and the variable (wear and tear) costs of running your car. The mean miles per gallon (MPG) is taken from manufacturers’ information, taking into account annual sales to businesses (Fleet Audits average 2017 to 2019). Since the total mileage does not exceed 10,000 miles, you can be reimbursed at 45p per mile for your total mileage. HMRC publish advisory fuel rates, the rate for electric cars is 4ppm. 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. Email (will not be shown) Notify me when people reply Login / Register. These Advisory Fuel Rates are also used to calculate the fuel portion of a mileage claim. HMRC fuel advisory Suggests . Whilst the grant can’t be used for used vehicles, there are grants available for other types of vehicle, such as vans and motorcycles. Sun Motors compares official range numbers to the latest real-world mileage tests on a selection of electric cars. The new rate means that HMRC will now accept that payments to employees of up to 4 pence per mile for business travel in a fully electric company car will not result in a taxable benefit in kind. Check price list, mileage, reviews & images of battery cars at CarDekho Instead, you’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes. 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 . Author. 15th Jan 2021. Otherwise, HMRC will treat any excess as taxable and the employer will be required to pay Class 1 National Insurance. The AMAP rate is higher than the AFR rate because it covers fuel costs as well as running costs such as MOT and repairs. You can use the previous rates for up to 1 month from the date the new rates apply. I suggest 35p per mile 0 0 Reply; Reply as guest. I do approximately 8,000 miles on business and about the same for personal use. So if an employee travels 8,000 miles for business purposes in their own fully electric car they could claim 8,000 x 45p = £3,600. With effect from 1 September 2018, the official mileage rate for electric company cars is 4 pence per mile. VAT on mileage - Electric car. According to Car magazine, roughly one in two new cars registered each year is part of a fleet purchase. When using a privately owned electric vehicle at work, it is possible to claim for mileage too. 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 . Costs as well as possible and improve government services or an SUV a hybrid car AFRs according to car,. 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