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Business mileage expense rates?

davidmc

Active Member
May 20, 2019
1,638
1,804
Leicester
I assume some people here either have there own business or have started to claim milage for business trips using their Model 3?

Wondered what the standard/average milage rate they are getting/giving for business miles for pure electric vehicles?

The reason is im the first at my businesss and they are giving me 4p a mile! Which i think is totally wrong and should be more like 14p ((Ab)Normal cars get 26p a mile)

I have done 200miles on business

I would get £8 for these trips at 4p/mile

If it was petrol/diesel i would get £52

Edit - should say i do get company car allowance to make things clear
 

ThrustSSC

Member
Aug 9, 2019
103
64
Evesham
A lot depends on whether it's a company car (payment covers fuel, oil, screenwash, cleaning only) or a personal car (payment covers fuel, tyres, insurance, maintenance, road tax, depreciation, etc.) - the latter includes personal leases.

Also, it can depend on whether you get a car allowance - which is intended to cover tyres, insurance etc. and leaves only fuel as the variable.

With company cars, the amount you get per mile is largely set by HMRC's Advisory Fuel Rates (AFRs). That's 4p for EVs, 14p for a 2-litre petrol, etc. Your company can give you more if it's justified - when you demonstrate your Defender V8 only does 12mpg, for example. Most companies won't actually do that unless you own the company as it's a personal service company! You will be taxed on anything more that is not justified.

If you get a car allowance then generally companies use the AFRs for those, too. It keeps it simple. But you can take a car allowance designed to cover a new BMW 320i every 4 years and buy a 12-year-old 318i and pocket the difference. I ran a Subaru Impreza STi PPP for 9 years and 212k miles, pocketing the most of cash once I'd paid for it over the first 3 years.

The catch with EVs is that you pay a lot more for the car (mainly the battery), then you get a lot less for mileage if your employer is so minded.

SOME companies (admittedly my employer included) recognise this and so give more than the AFR for personally-owned/leased EVs. At our place company-leased EVs still get 4p, which is fair enough given the BIK is so low. My employer is zero-carbon, so encourages us to get EVs by giving us the full 45p a mile - in the case of my M3 that I'll collect next Thursday that pays me back the extra £20k it will cost over a BMW 3-series in the space of 2.5 to 3 years. After that I'll be coining it.

So what I'm trying to say is that it varies by company, and the company scheme rules will dictate a lot of people's car choices. In my case, I really wanted the Tesla, and it was a no-brainer when I looked at the car scheme. I have to accept that as the number of EVs in the 'fleet' increases they may cut back on the amount I get.
 

arg

Active Member
Supporting Member
Aug 22, 2012
1,817
1,821
Cambridge, UK
Need to be clear whether you are talking about Mileage Allowance Payments for business use of a privately-owned car, or Advisory Fuel Rates to pay for the fuel in a company car.

The company is allowed to pay more or less than these rates - more might be taxable, less you may be able to reclaim tax.

MAPs are the same for EVs as ICEs - it's your choice to take the higher capital cost/lower running cost trade-off of an EV.

With company cars, most of the costs of the car are covered directly by the company, so the the only thing you are claiming on expenses is your extra out-of-pocket costs such as fuel and parking. The point of a mileage rate for fuel is to avoid argument about how much of a tank of fuel actually got spent on the business journey and how much was left over for your private use. You can always pay actual costs instead of using the estimated mileage rate.

For an EV, actual costs may be a better way to go - particularly if the employer provides workplace charging (that they can do tax-free) and there's just things like supercharging/rapid charging for long trips to be claimed for, which can be well above the mileage rate on the occasions you are forced to use them. Unlike a tank of petrol, you can reasonably argue that the rapid/super-charge is a cost you wouldn't have incurred at all without the business trip (otherwise charging for free at work or much lower cost at home) so the whole is a legitimate expense.
 

GoHyperActive

Member
Aug 18, 2018
69
21
London
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davidmc

Active Member
May 20, 2019
1,638
1,804
Leicester
Need to be clear whether you are talking about Mileage Allowance Payments for business use of a privately-owned car, or Advisory Fuel Rates to pay for the fuel in a company car.

The company is allowed to pay more or less than these rates - more might be taxable, less you may be able to reclaim tax.

MAPs are the same for EVs as ICEs - it's your choice to take the higher capital cost/lower running cost trade-off of an EV.

With company cars, most of the costs of the car are covered directly by the company, so the the only thing you are claiming on expenses is your extra out-of-pocket costs such as fuel and parking. The point of a mileage rate for fuel is to avoid argument about how much of a tank of fuel actually got spent on the business journey and how much was left over for your private use. You can always pay actual costs instead of using the estimated mileage rate.

For an EV, actual costs may be a better way to go - particularly if the employer provides workplace charging (that they can do tax-free) and there's just things like supercharging/rapid charging for long trips to be claimed for, which can be well above the mileage rate on the occasions you are forced to use them. Unlike a tank of petrol, you can reasonably argue that the rapid/super-charge is a cost you wouldn't have incurred at all without the business trip (otherwise charging for free at work or much lower cost at home) so the whole is a legitimate expense.
Our Company either offers a Company Car with fuel card or a Car Allowance (Addition to you salary)

Company Car you are covered for all costs (Insurance, maintenace etc) and the Fuel Card for all fuel but i got taxed with this (BIK)

I now take a Car Allowance (Yearly cost around £6k addition to my salary) which ofcourse is taxed on my salary.

The only pain now is i have to fill in a Monthly Milage expense claim form for all "business" related milage (not my commute or private) and this is set at 26p a mile for petrol/diesel but they became stumpped at Electric cars! as i was the first. I understand that they (My Company) can set the rate which i dont mind (Get free charge at work!) but when more and more of use get Elec this "Free" charge wont be and then the 4p for my business miles (although not much) will not pay for fuel, wear and tear.

My Calcs (Really rough Calc)

Elec Car:

200miles @ 4p = £8

Car consumption in Elec = 47kw (assuming real world of 210miles to 100%)
Average elec costs £0.15
47 x 0.15 = £7.14

Excess for wear & tear = 0.86p

Petrol/Diesel Car:

200miles @ 26p = £52

Car consumption in Fuel = 4.44gallons - 20.18464 litres (assuming real world 45mpg)
Average fuel costs £1.25/litre
20 x £1.25 = £25.00

Excess for wear & tear = £27.00

All i need to do is find some cheap tyres in the bargin bin at the tyre shop!

Feel free to correct me :)
 

arg

Active Member
Supporting Member
Aug 22, 2012
1,817
1,821
Cambridge, UK
I now take a Car Allowance (Yearly cost around £6k addition to my salary) which ofcourse is taxed on my salary.

The only pain now is i have to fill in a Monthly Milage expense claim form for all "business" related milage (not my commute or private) and this is set at 26p a mile for petrol/diesel but they became stumpped at Electric cars! as i was the first. I understand that they (My Company) can set the rate which i dont mind (Get free charge at work!) but when more and more of use get Elec this "Free" charge wont be and then the 4p for my business miles (although not much) will not pay for fuel, wear and tear.

Sounds like they are making a mistake. Tax wise, they can pay you up to 45p (25p after first 10K miles) and this is completely independent of the type of car - petrol/diesel/electric. Even pushbikes are entitled to 20p! So they've decided not to pay any employees the full rate because they've already paid you the car allowance (which you paid tax on).

My starting position is that you should be paid exactly the same as any other employee. They don't discriminate against drivers who used the car allowance to buy a car with low MPG, so they shouldn't discriminate against you - the contract says you get a car allowance to buy a car of your choice and 26p/mile to run it on company business - up to you if you use that to run a Skoda or a Rolls.

It is certainly completely wrong to use the government's 4p rate for electricity - the corresponding rate for petrol/diesel cars is about 14p, so if they were using these rates to compare what you get against what other employees get then you should be getting 26-14+4 = 16p.

But even that isn't reasonable, as it's a fundamental characteristic of EVs that they have higher capital cost and lower running cost, and here they have given you a fixed allowance against the capital cost, not accounting for the fact that the EV costs more, so they ought to give you a fixed allowance for the running cost, not accounting for the fact that the EV costs less.

If they insist on paying 4p/mile mileage allowance "because it's an EV", then they should pay bigger car allowance "because it's an EV".

PS. whatever happens, and even for an ICE, you can claim back tax on the difference between 45p and what you were paid on your tax return. This isn't a cheat, it's fair assessment for the fact that you have paid tax/NI on the car allowance, but part of that is being used to pay for business travel (because they aren't giving you the full 45p) and business travel should be tax free. Of course, if you don't do many business miles it might not be worth the bother.
 
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arg

Active Member
Supporting Member
Aug 22, 2012
1,817
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Cambridge, UK
If you are paid and taxed via PAYE (thus being employed, not self-employed), it is 45p a mile by law via the .gov website. I had finance at my place check it and was told that's what they need to pay me, which makes sense (electricity is cheaper, but the cars cost more).

That is what the CAN pay you, but they don't have to. It's the estimated cost of providing a "reasonable" car. Cheapskate employers can pay less.

In @davidmc 's case, they have a reasonable excuse for not paying the full amount - they've already paid a car allowance as part of salary. So in essence they are saying that the 45p it costs you is covered partly by the car allowance and partly by the 26p they pay per mile. But the car allowance has been taxed where the 45p wouldn't have been (and the 26p isn't), so you can get back the extra tax paid.
 

Big_G

Member
Sep 12, 2019
34
8
UK
If you are paid and taxed via PAYE (thus being employed, not self-employed), it is 45p a mile by law via the .gov website. I had finance at my place check it and was told that's what they need to pay me, which makes sense (electricity is cheaper, but the cars cost more).

Website: Expenses and benefits: business travel mileage for employees' own vehicles

Not quite true, company doesn't have to pay you anything, they could just get you to claim the 45p via P87 or SA at the end of the tax year.
 

Fullerene

Member
Jul 31, 2019
372
397
Dorset, UK
My Mrs was pleased as there was a "free" charger at work - on asking for more information about using the charger it appears to be 16p / kWh about breakeven on the AER 4p/mile rate

I feel that given a large enough roof companies could profit from this. Anyone here work for for Aviva - are they charging in both senses? Perth (114kWp), Norwich, below, (184kWp) and Bristol (244kWp)

aviva.jpg
 

arg

Active Member
Supporting Member
Aug 22, 2012
1,817
1,821
Cambridge, UK
Company Car you are covered for all costs (Insurance, maintenace etc) and the Fuel Card for all fuel but i got taxed with this (BIK)

Of course you would now be much better off having the Tesla as a Company car - 0% BIK next year, then 1% and 2% in the following two years.

(Note: the way this works is that the BIK percentage is applied to the full list price of the car, before the £3500 grant was taken off, and that resulting sum is treated as if it were extra income. So if the list price of a Model 3 is £50K, you will pay tax at whatever your marginal rate is on £0 next year, £500 the following year and £1000 the year after. Assuming the Car Allowance is more than that(!) you will be paying less tax, and probably better off overall).
 

ProfessorK

Member
Aug 5, 2019
246
132
UK
Ah, I missed the car allowance part. Most of us don't have that. Then yeah, they can just pay a pittance. I know our VPs aren't paid anything for their mileage as their car allowance is more than some people's salaries at the company, which caused a lot of aggro.

I'm WFH and my company pays me to go into the office incl. board and lodgings, which is the least a company should do.
 

davidmc

Active Member
May 20, 2019
1,638
1,804
Leicester
Thanks All

Agree with you there @arg about having a Tesla M3 as a company car with 0% BIK would be amazing!, but my company wont (Not for long as i i keep bending there ears about it!)

They offered me a Toyota RAV4! im actually better off by around £120 a month with a M3 than a company car RAV4 with fuel card. This saving will pay for my Elec, Tyres & servicing (if needed?) - and a nicer car ofcourse :)

One huge bonus i get tho with all these RAV4's that the company is getting for people, the director is getting some extra charge points put in. Ive not told him they dont plug in (They are the self charge ones)!
 

arg

Active Member
Supporting Member
Aug 22, 2012
1,817
1,821
Cambridge, UK
My Mrs is the only person who doesn't want her car immediately - 0% BIK in April, it will cost her quite a bit until then.

By the time you've negotiated with the company, got them to order one, got Tesla to deliver it? Get it in January then 3 months BIK at 13%, so £50K * 13% * 3/12 * (tax rate, say 40%) = £650 that your impatience is going to cost you...
 

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