Expensing EV mileage UK

[yessuz]

8p per mile is the current advisory rate for EVs from 1 December.

No it is not.

8p per mile is for company car miles. Personal car reimbursement for business miles is 45p per mile for first 10k miles.


there is a difference

 

[yessuz]

Just ask work to supply a hire or pool car for business travel - they will soon start to pay the going rate.

They can pay you anything as a flat rate for mileage, but for flat rate if above advisory rate you will just have to pay tax on it.

not necessarily. If you actually applied for cash allowance instead of company car... they can say that you chose to drive personal vehicle, hence no pool cars

 

[yessuz]

Most companies that pay an allowance won’t pay 45p. 45p is meant to cover wear and tear as well as energy costs whereas your allowance is meant to cover the first part. The last two companies I’ve worked at have paid 20p and 18p for people with an allowance, both for ICE and EV owners.

same with me.. except is 14p EV and 25 for ICE. And then they say - but hey, you have car allowance, so all is good.

and then there is caveat that car for business use must be not older than 8 years. car allowance barely cover travel costs and maintenance, and I am not talking about that question: who pays for lease?

 

[browellm]

No it is not.

8p per mile is for company car miles. Personal car reimbursement for business miles is 45p per mile for first 10k miles.


there is a difference

https://www.fleetnews.co.uk/news/latest-fleet-news/electric-fleet-news/2022/11/17/hmrc-increases-advisory-electricity-rate-to-8ppm

You are conflating AMAP with AER

 

[yessuz]

The 45p is supposed to cover not just fuel but tyres, maintenance, depreciation etc i.e. it is supposed to represent the real world cost of buying and running a car. If the company is basically giving you a lump sum every year in the form of a "car allowance" I think they might reasonably expect that that payment covers off those other issues and all they need to give you on an on going basis is enough to cover fuel.
now whether that adds up I don't know. Depends on how many company miles you do but I think it is not unreasonable to refuse to pay 45p on that basis.

No, it is actually unreasonable expect employee to suck up all the cost. most of employers with such policy will state that car must be certain age and not older, meaning it is always relativelly new car which financing will cost more or less close to monthly allowace.

That does not necessarily mean I think 4p or 8p etc is fair. The problem is everyone pays roughly the same for Petrol most of the time but electricity prices. vary by a factor of 10 so there is no simple way to. Do it. we need a new method that works for EV's


Here is my straw man opening proposal
work out the average kwh/m of an EV say 0.35 ( if you buy a car that does better than that that's a win for you same as would be with an ICE)
work out the average price of domestic electricity. currently I would use the price cap figure say 34p
then the price I would pay per mile would be 34*0.35 = 11.9p
BUT
what if the person could not charge at home or had to do long journeys out of range?
There would be a supliment.
for public charging I would also pay the (price per kwh charged - 34p)*number of kwh.

Obviously more complex than the current ICE methods but EV fuel pricing is more complicated than ICE fuel pricing. Unless we have something like the above there are going to me massive winners and losers in the EV fuel compensation game. At the moment the big winners are the companies paying 4p per mile and the big losers anyone reliant on public charging. Long term it is not sustainable.
I appreciate that anyone able to do all their charging on Octopus Go etc or Solar is going to be the big winner in the above proposal but its still better than the current system.

I just collected the ionity, supercharger, BP Pulse and other price per kwh and sent to hr...

all in all, 10 miles cost ~1.6 gbp if you charge on these facilities (at ~60p per kwh) and this is on par with average ICE petrol...

now anxiously waiting for expenses policy update as I know this is happening this year..

 

[yessuz]

https://www.fleetnews.co.uk/news/latest-fleet-news/electric-fleet-news/2022/11/17/hmrc-increases-advisory-electricity-rate-to-8ppm

You are conflating AMAP with AER

If you read OP, his tesla is his private car, hence AMAP rate is applicable for him Travel — mileage and fuel rates and allowances therefore his rate which is applicable for him is 45p for first 10k business miles and not anything else. anything else is taxed only if above, and tax reimbursed if he is paid less than the rate

 

[browellm]

If you read OP, his tesla is his private car, hence AMAP rate is applicable for him Travel — mileage and fuel rates and allowances therefore his rate which is applicable for him is 45p for first 10k business miles and not anything else. anything else is taxed only if above, and tax reimbursed if he is paid less than the rate

The OP, like myself and many other employees who use their own car for work, are paid at the AER rates by their employer . An employer can contractually pay whatever they want to it's employees, neither the AER or AMAP rates are enforceable or locked in in any way.

I said that the AER is 8p for EVs and it is.

anything else is taxed only if above, and tax reimbursed if he is paid less than the rate

Exactly what I said in my original reply to him. Honestly don't know what is wrong with you.

 

[Jason71]

No, it is actually unreasonable expect employee to suck up all the cost. most of employers with such policy will state that car must be certain age and not older, meaning it is always relativelly new car which financing will cost more or less close to monthly allowace.

So what is the point of a car allowance rather than just a larger salary? Genuine question never been in this position ?
In my limited experience of one company to be something you could get instead of a company car if it was more tax efficient or better for you in some way to do that rather than have a company car. But that being the case if the company is helping to finance your car surely they expect something in return? I mean if you had a company car there would be no question over you using it for business purposes so if you take the money instead is it not still the same?

 

[browellm]

So what is the point of a car allowance rather than just a larger salary? Genuine question never been in this position ?
In my limited experience of one company to be something you could get instead of a company car if it was more tax efficient or better for you in some way to do that rather than have a company car. But that being the case if the company is helping to finance your car surely they expect something in return? I mean if you had a company car there would be no question over you using it for business purposes so if you take the money instead is it not still the same?

Employer won't be paying NI on car allowance for one thing.

 

[yessuz]

The OP, like myself and many other employees who use their own car for work, are paid at the AER rates by their employer . An employer can contractually pay whatever they want to it's employees, neither the AER or AMAP rates are enforceable or locked in in any way.

I said that the AER is 8p for EVs and it is.


Exactly what I said in my original reply to him. Honestly don't know what is wrong with you.

I think you are missing the point here. AER rate is not the same as HMRC business travel rates in own vehicles. Therefore for any business mile in your own vehicle you are entitles to 45p per mile for first 10k miles (and 25 p thereafter) irrespective of any advisory rate on any fuel, unless HMRC says differently. If you are paid less - you claim tax relief on difference. if you pay more - you pay tax on difference.

These two rates should not be compared ever as they both have two completely different aims and purposes

 

[yessuz]

So what is the point of a car allowance rather than just a larger salary? Genuine question never been in this position ?
In my limited experience of one company to be something you could get instead of a company car if it was more tax efficient or better for you in some way to do that rather than have a company car. But that being the case if the company is helping to finance your car surely they expect something in return? I mean if you had a company car there would be no question over you using it for business purposes so if you take the money instead is it not still the same?

as mentioned above - NI. otherwise not much of the difference, really

but having personal car rather than company car might look better if you want to drive something else than the limitations of company car fleet (like in my case). or in some cases it might be quite profitable.. if you are paid allowance + 45p and you doo like 1000 business miles a month, for 10 months you would make let's say 450 gbp. add this to ~300 post tax as car allowance and you got yourself a tesla monthly payment covered. in the end of the term you get an asset (and a bit of liability) which your employer paid for. anything on top of that 1000 miles / month is pure profit.

issue arises here when employers start to save pennies which might turn up against them. Like in my company, they just realized, after couple of years, that it should be 14 p for EVs (25 p for ICE) rather than 45p per mile... therefore sales guys (we are lar engineering company, so not many daily customer visits, but might be 200 miles one way) who have car allowance and started to be paid much less, so they started to use trains and taxis more...

 

[browellm]

I think you are missing the point here. AER rate is not the same as HMRC business travel rates in own vehicles. Therefore for any business mile in your own vehicle you are entitles to 45p per mile for first 10k miles (and 25 p thereafter) irrespective of any advisory rate on any fuel, unless HMRC says differently. If you are paid less - you claim tax relief on difference. if you pay more - you pay tax on difference.

These two rates should not be compared ever as they both have two completely different aims and purposes

I've bolded the bit above. I KNOW.

Which is why I said REGARDLESS OF THAT:

The OP, like myself and many other employees who use their own car for work, are paid at the AER rates by their employer

It's very very common. And more importantly, that's the same situation the OP is in.

 

[GeorgeSymonds]

Employer won't be paying NI on car allowance for one thing.

They will, a car allowance from a HMRC perspective is just “pay”

The difference usually relates to pensions, life insurance etc. if an employer agrees to contribute 6% to a pension fund, this doesn’t include the car allowance or any other flexible benefit that can be taken as cash. Life insurance is usually linked to the base salary.

 

[DaveNN]

Well the EV rate for company cars is a derisory 4p so it’s not that. 8p is not enough really these days. If they pay 45p for ICE then they should do the same for EV.

You can’t get the 37p back from HMRC, only the tax relief which depends on your tax rate. Better than nothing and probably plugs the gap for actual fuel cost.

Doing a claim based on a mix and match of fuel receipts and mileage allowance sounds like an admin ball-ache. You’d have to estimate the mileage driven on the supercharge delivery from your consumption figure and subtract from the total. Messy.

It's now 8p.
It was increased from 5p 1..12.22

 

[DaveNN]

They will, a car allowance from a HMRC perspective is just “pay”

The difference usually relates to pensions, life insurance etc. if an employer agrees to contribute 6% to a pension fund, this doesn’t include the car allowance or any other flexible benefit that can be taken as cash. Life insurance is usually linked to the base salary.

This...


If an employer offers an EV as a Co car, it's a no brainer IMHO.

 

[DaveNN]

My outfit do this.
You get 8ppmile.
All electric costs are self funded.
It's simple and works perfectly for me.

 

[TimboUK]

My outfit do this.
You get 8ppmile.
All electric costs are self funded.
It's simple and works perfectly for me.

Still slightly on topic, do you have to give receipts for your "fuel" to claim this with your company? In an argument at the moment with my employer who is insisting I have to put in receipts to them to claim the AER rate of 8p (although they are only currently paying 5p)? My understanding is that they do this with petrol and diesel to be able to reclaim the VAT, but I'm sure they cannot claim VAT on electric costs.

 

[GeorgeSymonds]

Still slightly on topic, do you have to give receipts for your "fuel" to claim this with your company? In an argument at the moment with my employer who is insisting I have to put in receipts to them to claim the AER rate of 8p (although they are only currently paying 5p)? My understanding is that they do this with petrol and diesel to be able to reclaim the VAT, but I'm sure they cannot claim VAT on electric costs.

Maybe give them your home electric bill for the month, they’ll probably not be able to cope with the 5% vat rate and give up.

 

[DaveNN]

Still slightly on topic, do you have to give receipts for your "fuel" to claim this with your company? In an argument at the moment with my employer who is insisting I have to put in receipts to them to claim the AER rate of 8p (although they are only currently paying 5p)? My understanding is that they do this with petrol and diesel to be able to reclaim the VAT, but I'm sure they cannot claim VAT on electric costs.

Nope, as they would need a VAT receipt generated by the wall box.
I believe that your employer are being a little bit mardy.
We simply do the miles, enter into our expense portal and put a detailed claim through.
It does rely on the usual amount of transparency and honesty.
My employer did fully fund the wall charger.

 

[btc1k]

You just said some words in a different order which have the exact same outcome.

If you claim for 40% of the 37p, as an expense, it will reduce your taxable income by that amount as that's how P87 and SA expense claims work.

You don't calculate the 40% yourself and claim that - because then it would be reduced again by 40%.

You should claim the expense in full and your income is then reduced, giving you the relief.

So
40% of £1000 = £400 relief
Or claiming 40% of the 40% = £160 relief