Nissan LEAF 2018 charging
Business mileage rates for electric cars remains a grey area - here's the latest advice
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COMPANY car drivers who have electric cars are in for a shock.

They might be able to charge up their company car but they can’t charge for business mileage.

And the reason, according to the tax man, is that electricity is not a fuel.

Currently the Advisory Fuel Rates which are used to reimburse business mileage without incurring benefit-in-kind taxation, apply only to petrol or diesel cars.

For drivers of hybrids (such as the Toyota Prius), HMRC says you should use the appropriate petrol or diesel rates depending on the fuel used by the engine.

However, what about electric cars and plug-in electric hybrids (PHEVs)?

HMRC rules say that “advisory fuel rates are based on the average price of fuel per mile – electricity is not a fuel”.

ACFO, the UK’s leading fleet-decision-makers’ organisation, is holding ongoing discussions with HM Revenue and Customs about electric business car mileage rates but currently there is no way to reclaim the cost of the electricity used.

To further its cause, ACFO has launched a petition for HMRC advisory fuel rates for electric cars.

Business woman charging up an electric car
Use your private electric car for business and claim 45ppm

So sadly there is no good news for the reader, Chris Sullivan, who contacted us to say he personally paid for the electricity that powers his Nissan Leaf company car – at 5p per mile or £400 per year – and couldn’t find an electric business car mileage rate to claim back his expenditure.

It would be different if he had bought the car privately and then expensed the running costs through the company via the AMAP rates, which would be 45p per mile tax free for the first 10,000 miles of business mileage, and 25p per mile thereafter – see the comments section of our story Tax: Business mileage rates for using a private car (AMAP)s.

Advice from TMC on electric business mileage rates

Nevertheless, TMC a company that offers businesses control and cost savings across fleet and travel operations, has produced a downloadable PDF that offers advice on how to claim for business mileage for electric and PHEV cars.

POD Point Electric Vehicle Charging Infrastructure
Infrastructure for charging exists – but not the means of claiming business mileage for electric cars

The guide is called ‘Electric Vehicle Fuel Rates – a TMC guide‘ which was first issued last year, and has now been updated in line with the latest HMRC advice on reimbursing employees for electricity supplied at their home and/or at their workplace. The change in tax rules post April 2018 removes the BIK for employees charging private cars at work.

Paul Hollick, Managing Director of TMC, said: “Reimbursement remains a significant area of uncertainty for companies considering adopting electromobility.

“So everyone will be watching how HMRC responds to the new petition organised by the Association of Car Fleet Operators asking it to publish AFRs for plug-in cars, which we are very much behind.

“In the meantime, the key point businesses and drivers should bear in mind is that fuel cost-savings from EVs are already here for the taking. Our guide describes how to capture those savings today by paying rates that fairly reflect real-world cost-per-mile potential of EVs, using methods that fully comply with the rules on fuel reimbursement.”

TMC suggests the following formula for paying the estimated cost electricity used from a domestic supply.

Use the manufacturer’s published range based on NEDC and the kWh rating of the battery.

So for a Nissan Leaf this has a 30kWh battery with a range under NEDC of 155 miles. If you do the maths this gives a mileage per kWh of 5.17.

The average price per unit for electricity in the UK is 14p per kWh. Divide this into the 5.17 miles this would equal a pence per mile of 2.7p. TMC thens says you should apply the same 15% reduction for real world conditions used in the AFR calculation, then miles per kWh drops to 4.14 and provides a figure of 3 pence per mile.

Regarding SMEs turning to electrified company car solutions, Hollick adds: “Don’t let the lack of an ‘official rate’ hold you back.”

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  1. I don’t see any reason why you could not use an average PPM rate. This is allowable today where you divide the fuel spend for the period by the miles driven in that period, resulting in a PPM for all mileage. Once you have the PPM for all mileage then multiply that by the personal mileage.

    Same goes here I would think.

    If Chris spent £400 on electricity charging his car and then drove 400 miles (example only) then it works out at £1 per mile. If business mileage is 50% (200 miles) then claim back £200 from your employer. Seems like it should work

    HMRC would have to be pretty stingy to challenge this, so long as you have accurate mileage records and can show the cost of charging your car. It is a legitimate expenses after all.

    I do however agree that HMRC does need to address the ambiguity. If I were a company car driver considering an EV it would make me think twice. We need to reduce barriers for EV adoption wherever possible.


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