HMRC Electric Car Mileage Rates 2024: Essential Guide for UK Employers
Natasa Djalovic
Last update on:
July 15, 2024 10:23 AM
Published on:
With 1,145,000 electric cars and 670,000 plug-in hybrids on UK roads as of June 2024, the number of electric vehicles is growing rapidly.
Businesses are joining the trend, with EVs becoming an increasingly popular choice for employee travel.
For employers, understanding and correctly applying HMRC electric car mileage rates is a necessity for providing fair employee compensation, maintaining compliance with tax regulations, and potentially reducing your company's carbon footprint.
In this guide, you'll learn:
How HMRC mileage rates are applied to personal and company-owned electric cars.
How Mileage Allowance Payments (MAPs) work and their tax implications.
Why electric car usage can benefit both employees and employers.
How to streamline mileage reimbursement with technology like Timeero.
Let's explore the details to prepare your business for the age of electric vehicles.
Simplify Your Electric Car Mileage Reimbursements.
Learn how Timeero can automate tracking, ensure accuracy, and keep your business compliant.
A common question among employers is whether HMRC mileage rates differ for electric cars.
The HMRC has two distinct sets of rates for electric vehicles:
Approved Mileage Allowance Payments (AMAPs)
Advisory Electricity Rate (AER)
The rate you will use depends on whether or not you’re covering the costs accrued by company car drivers or the reimbursement rates for employees driving their personal vehicles for business purposes.
Let’s look at how rates are applied in more detail.
1. Employees Using Personal Electric Cars
The Approved Mileage Allowance Payments (AMAP) rate applies to employees who use their personal electric vehicles for work. The advisory fuel rates for AMAPs are the same as petrol and diesel car rates for the 2023/2024 tax year:
45 pence per mile (ppm) for the first 10,000 business miles
25 ppm for each additional mile
Approved Mileage Allowance Payments (MAPs) are designed to cover the costs associated with using a personal vehicle for business travel, such as fuel (or electricity), maintenance, and wear and tear.
2. Employees Using Electric Company Cars
If your company provides electric cars for work, a different rate applies. HMRC provides an Advisory Electricity Rate (AER) of 8 pence per mile as of June 1, 2024.
New company car advisory rates are typically reviewed quarterly and published each year on the 1st of March, June, September, and December. You should always check the government website for the most recent figures.
This reimbursement is not considered a benefit, as it's meant to cover the actual cost incurred by the employee for business-related charging.
HMRC also lets employers use their own mileage rate if the business travel cost is higher than the AER and the electric cars used are more fuel-efficient.
However, if you opt to use a higher rate, you must be able to prove that the actual electricity cost per mile is higher. Otherwise, any excess reimbursement will be treated as taxable income and subject to Class 1 National Insurance contributions.
PRO TIP: If your employees use plug-in hybrid or hybrid cars, HMRC recommends using the Advisory Fuel Rates (AFRs) based on the type of fuel used. This means the rate will depend on whether the vehicle primarily runs on LPG, petrol, or diesel. HMRC rates don't differentiate between whether the driver mainly uses the electric motor or the petrol/diesel engine.
Understanding Mileage Allowance Payments (MAPs)
Mileage Allowance Payments (MAPs) are a tax-efficient way to reimburse employees who use their own cars, including electric vehicles, for business purposes.
The “approved amount” you can reimburse tax-free depends on the employee’s total business mileage and the applicable HMRC mileage rate for their vehicle type.
Key Points for Employers Regarding MAPs
Excess Reimbursement. If the reimbursement exceeds the amount calculated based on the HMRC mileage rates, the excess is considered taxable income. As such, it must be reported on a P11D form.
Mileage Allowance Relief (MAR). If an employee receives less than the amount calculated using HMRC rates, they can claim tax relief on the difference.
MARORS. Employers can optionally join MARORS to simplify the reporting of mileage allowances.
PRO TIP: If you provide charging facilities for your employees’ electric vehicles at or near the workplace, this is generally considered a tax-exempt benefit. This means there’s no additional tax or National Insurance liability for either the employer or the employee.
Example: Tax-Free Reimbursement Limit for Personal Electric Car Usage
Let’s say your employee, Sarah, used her own electric car to travel 14,500 miles for business purposes during the 2023/2024 tax year.
Step 1. Calculate Reimbursement for the First 10,000 Miles:
10,000 miles x 45 ppm = £4,500
Step 2. Calculate Reimbursement for the Remaining Miles:
4,500 miles x 25 ppm = £1,125
Step 3. Determine the Total Tax-Free Reimbursement Limit:
£4,500 + £1,125 = £5,625
In this scenario, you can reimburse Sarah up to £5,625 for the tax year without any tax implications for her or your company.
If you were to reimburse her more than this amount, the excess would be considered taxable income and subject to reporting on a P11D form.
Correctly applying HMRC electric vehicle mileage rates ensures your company adheres to tax regulations and avoids potential penalties and legal issues.
Additionally, compensating your employees for business mileage demonstrates that you value their contributions and keeps them from experiencing out-of-pocket expenses. Issuing compensation is a way to show fairness and respect toward your employees.
By applying the correct rates and tracking mileage effectively, you can better manage and control your company's overall travel expenses.
Electric Cars: A Strategic Advantage for Your Business
While electric car drivers can claim the same AMAPs as those using conventional vehicles, fully electric cars often have lower operating costs due to cheaper electricity and reduced maintenance.
This is a win-win situation for both employers and employees.
Employees can save money on fuel and potentially receive tax benefits through MAR.
On the other hand, employers who use electric vehicles can reduce overall travel expenses and show their commitment to sustainability.
How to Claim Mileage for Business
Employees can claim mileage for business journeys using two main methods:
Traditional Logs. This involves manually recording each business trip’s date, destination, purpose, and mileage in a paper logbook or spreadsheet. However, this method is time-consuming and often prone to errors, omissions, and lost records, leading to frustration and potential disputes over reimbursement.
Mileage Tracking Apps. Mobile applications like Timeero automate the tracking process by using GPS technology. This ensures accurate mileage records, eliminates manual data entry, and provides employees with a seamless tracking experience.
No matter the method used, HMRC requires meticulous records to be kept of business mileage, with details including:
Dates of journeys
Start and endpoints
Business purpose
Total mileage per journey
Vehicle type
According to the HMRC guidelines, commuting between home and a regular workplace is not considered business mileage and is not eligible for reimbursement.
Timeero: Your All-In-One Mileage Reimbursement Solution
Managing mileage reimbursement can be a complex task. Timeero, a leading mileage tracking app, can significantly streamline this process.
Below we will highlight the unique benefits Timeero brings to your business:
Automated and Accurate Mileage Tracking
Timeero automatically tracks mileage for work in the background using GPS, eliminating the need for manual logs and reducing the risk of errors. This ensures accurate and reliable mileage data for reimbursement. When employees clock in using their mobile devices, the app detects driving speed and automatically starts tracking mileage. Using GPS technology, Timeero accurately captures the start and end points of each journey and the distance traveled.
Track mileage with Timeero.
If your employees travel to remote locations with weak or no internet connection, don't worry. Timeero tracks mileage offline, too.
Mileage data is securely stored for easy access to generate reports and calculate reimbursements.
Customizable Mileage Rates
Quickly customize company mileage rates.
Timeero makes it easy to create and manage your company’s mileage reimbursement policy. The app allows you to have complete control over your rates, whether you follow the HMRC guidelines or set your own. You can easily configure standard rates for all employees or personalize rates for individuals based on their specific roles or vehicles. If you have company-owned electric cars, you can also set up the AER reimbursement rate for those employees directly within the app.
Automatically deduct commute mileage from business travel.
Timeero also offers a commuter feature that allows you to automatically deduct an employee’s daily commute from their total mileage, ensuring you only reimburse employees for business-related travel.
Timeero’s tracking flexibility allows you to maintain a fair, compliant, and customized reimbursement policy.
Seamless Expense Tracking
Conveniently attach photos and notes to timesheet entries.
Timeero allows employees to easily track additional business expenses. Employees can take pictures of toll, parking, and vehicle maintenance receipts and attach them directly to their mileage logs.
Simplified Reporting
Generate compliant mileage reports.
Timeero generates comprehensive, HMRC-compliant reports that make it easy for employers to review and approve mileage claims. The ability to produce precise reports saves employers time and reduces administrative burden.
Real-Time Visibility
Employers can track employee locations in real time, encouraging accountability and efficient route planning.
Through the "Who's Working" dashboard, employers can track employee locations in real time, gaining valuable insights into their whereabouts and activities.
View working employees’ locations in real-time through the “Who’s Working” dashboard.
With real-time visibility, employers can make sure workers are on task and adhering to company policies regarding travel and work hours.
Replay Routes and Access GPS Breadcrumbs
With Timeero, employers can easily see the exact routes employees have taken during their workday.
Foster transparency in the workplace by replaying employee driving routes.
A timestamped history of employee locations provides employers with a comprehensive overview of employee movements throughout the day. This allows managers to review travel patterns in detail and spot potential optimization opportunities.
Segmented tracking
For employees who frequently travel between multiple job sites or customer locations, Timeero’s Segmented Tracking feature extremely valuable.
Segmented tracking gives you a bird’s eye view of all business activities.
The feature automatically breaks down the workday into distinct segments, showing the time and distance traveled between each location. This gives employers an overall idea of how employees spend their time on the road. Using Segmented Tracking makes it easier to identify inefficiencies, optimize driving routes, and verify mileage claims.
Integration with Payroll Software
Timeero seamlessly integrates with popular accounting and payroll systems.
Timeero integrates with popular payroll software, such as:
Integrating Timeero with your payroll software helps you automate the reimbursement process and reduce manual data entry.
Cost Savings
Timeero compares driving routes to help you optimize travel and reduce travel costs.
Timeero’s Suggested mileage and Shortest distance features let you optimize routes and encourage efficient driving.
Timeero recommends the shortest driving route to your employees.
By using Timeero, you can create a more efficient, transparent, and accurate mileage reimbursement system that benefits both your employees and your business. Read our detailed Timeero review to learn about how our app can help your business.
HMRC Electric Car Mileage Rates: Key Takeaways for UK Employers
Staying on top of HMRC electric car mileage rates is essential for any UK employer with a mobile workforce. By understanding the intricacies of AMAPs and AERs, you can ensure fair compensation for your employees and stay compliant with tax regulations.
And with the rising popularity of electric vehicles, there’s no better time to use technology to simplify your mileage reimbursement process.
FAQ
Does the HMRC mileage rate apply to electric vehicles?
Yes, HMRC mileage rates apply to both personal and company-owned electric vehicles, but with different rates.
Are there different HMRC mileage rates for electric cars compared to petrol or diesel vehicles?
Yes. While the AMAP rates for personal electric cars are the same as those for petrol and diesel cars, company-owned electric vehicles have a separate, lower rate called the Advisory Electricity Rate (AER).
What are the HMRC electric car mileage rates for the 2023/2024 tax year?
The rate for Personal Electric Cars (AMAPs) is 45 pence per mile for the first 10,000 business miles and 25 pence per mile thereafter. The rate for Company-Owned Electric Cars (AER) is 8 pence per mile.
Ready to take the hassle out of mileage reimbursement?
Experience the benefits of automated, accurate, and efficient mileage tracking.
Natasa is a writer specializing in the IT and software industry with 6+ years of experience in content writing and online marketing. During that period, she wrote more than 1,000 articles and several ebooks. She majored in English language and literature and loves cats, sneakers, and candy. When she's not working, she's probably binge-watching Netflix.
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