By Natalie Middleton / 5 years ago / Latest News / No Comments. 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. If you’re interested in learning about electric car business allowances, we created a complete guide to show you how to decide an electric car mileage allowance for your business. That’s why the ACFO, the fleet decision-maker’s organisation, has been putting pressure on HMRC to provide companies with a new electric car mileage rate. The AMAP rate is higher than the AFR rate because it covers fuel costs as well as running costs such as MOT and repairs. 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. Its driving range for a full charge has been boosted to 243 from 111 in the 2019 model. Myriad Associates. Author. 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 . We use cookies to collect information about how you use GOV.UK. Brexit and the impact on VAT. 5. 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. Mileage rates for electric and hybrid cars. HMRC outlines mileage reimbursement rates for electric cars. 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 Conclusion: The Most Cost-Effective Cars for Your Business HMRC will introduce an advisory fuel rate (AFR) for pure electric cars from September 1 at 4 pence per mile (ppl). The advisory electricity rate for fully electric cars is unchanged at 4p per mile. You can use the previous rates for up to 1 month from the date the new rates apply. The level of Mileage Allowance Relief a driver can claim for tax purposes cannot exceed 45p per business mile (25ppm if the mileage exceeds 10,000) less any amount already paid tax free to the driver. The Advisory Fuel Rate is based on the engine size and fuel type of your car. You’ve accepted all cookies. Advisory Fuel Rates (AFR’s) should be used to re-imburse business use company car mileage. Hybrid or range-extender company cars will have the appropriate HMRC rates applied depending on whether they’re diesel or petrol. Hybrid or range-extender company cars will have the appropriate HMRC rates applied depending on whether they’re diesel or petrol. 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 …but now pure electric cars pay no company car tax. We use this information to make the website work as well as possible and improve government services. Emma Rawson. Check the full list of vehicles eligible for the plug-in grant. 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. Advisory fuel rates from 1 March 2020 However, with more than half (56%) of company car drivers unaware of HMRC rules on reclaiming business mileage, this blog aims to clarify claim allowances and eligibility. Hybrid cars – those that are powered by both electric and internal combustion engines – are treated as petrol/diesel cars under the HMRC rules. Didn't find your answer? Search AccountingWEB. Company cars and using the advisory fuel rate. Where the: For liquefied petroleum gas (LPG), the MPG used is 20% lower than for petrol due to lower volumetric energy density. 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. The same 45p per mile for first 10k then 25p a mile thereafter applies. If an employee does 100 business miles in this car, and charges the car at home, the company will pay them 4p per mile, which is the Advisory Electric … Electric cars need mileage rate support. Advisory Fuel Rates (AFR’s) should be used to re-imburse business use company car mileage. According to Car magazine, roughly one in two new cars registered each year is part of a fleet purchase. Check price list, mileage, reviews & images of battery cars at CarDekho You should also keep in mind that the HMRC rates don’t consider whether a driver mainly uses the electric motor or petrol engine. Mileage expenses on an electric personal vehicle. Mileage allowance guide; Mileage allowance for self-employed . 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. The advisory electricity rate for fully electric cars is unchanged at 4p per mile. Just sign-up to our monthly newsletter: Bookkeeping services for Surrey businesses. 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. Some confusion has been reported over how businesses should calculate mileage expenses rates for electric and hybrid company cars. 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. HMRC publish advisory fuel rates, the rate for electric cars is 4ppm. The New Brexit Deal: What Accountants Should Know. HMRC don't have a different rate for electric vehicles. Don’t worry we won’t send you spam or share your email address with anyone. Registered office address: 2 AC Court, High Street, Thames Ditton, Surrey KT7 0SR. When it comes to company cars, the tax payable (classed as a benefit in kind or BIK) is more complicated. From 2020, drivers with diesel company cars will also have to pay a 4% tax surcharge unless their car meets new RDE2 standards. Due to HMRC not recognising electricity as a fuel, organisations have pulled the plug on introducing 100% electric vehicles to their fleets. Some confusion has been reported over how businesses should calculate mileage expenses rates for electric and hybrid company cars. As it is your car the own car rate rules apply. 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 . 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. Registered company number: OC323740. We’ll send you a link to a feedback form. From 1st September 2018, employees driving on business in a pure electric company car can claim 4p per mile. 4th Dec 2020. Instead, you’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes. Sage Accountants. Your employer uses HMRC's AMAP rate of 45p per mile. To be eligible for mileage allowance under the AMAP rules, you must be using your own personal vehicle; e.g. 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. As this is a multi … Don’t include personal or financial information like your National Insurance number or credit card details. to reimburse the employee for business mileage, or; for the employee to reimburse their employer for the cost of fuel which has been used for private mileage. This confusion has arisen largely because HMRC’s advisory fuel rates, or approved mileage allowance payments, only cover petrol and diesel cars. With regard to fuel costs, if a business pays an employee a mileage allowance, whereby VAT is recoverable on the fuel element of that mileage allowance, HMRC have published a 4p per mile rate for electric cars in their advisory fuel rate table. Industry insights . You drive two cars for the same job, driving 3000 miles with Car One and 6000 miles with Car Two. Although the tax on company cars has risen steadily over the years, they remain incredibly popular in the UK. Because of this, hybrid drivers have to work out their mileage claim using the Advisory Fuel Rate tables for … 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). Here’s more on how to claim MAR. Generally speaking electric vehicles need a bigger up front investment and the mileage rate is to cover capital cost, running cost & depreciation. Find out about advisory fuel rates for company car users, when you can use them, and how they're calculated. The advisory electricity rate for fully electric cars is 4 pence per mile. The guidance given by HMRC for fuel-only mileage rates for company cars confirm that employers do not have to use advisory fuel rate. 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. Well, AMAP is not fuel dependent. Talk to us and we can help you prepare your tax return and advise you on the best options for deferred payments. HMRC publish advisory fuel rates, the rate for electric cars is 4ppm. With effect from 1 September 2018, the official mileage rate for electric company cars is 4 pence per mile. Fuel Duty 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. 15th Jan 2021. 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. When using a privately owned electric vehicle at work, it is possible to claim for mileage too. Related articles. There aren't any separate HMRC rates for your situation. 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. Claim capital allowances so your business pays less tax when you buy assets - equipment, fixtures, business cars, plant and machinery, annual investment allowance, first year allowances 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. This is 45pp for the first 10,000 miles and 25pp thereafter. If you have an electric car as a company car, the advisory electricity rate is 4p per mile. Overall, this means that although buying an electric car can be expensive in the first place, in the long-term they can be a cheaper alternative to petrol or diesel cars. 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. Hybrid cars – those that are powered by both electric and internal combustion engines – are treated as petrol/diesel cars under the HMRC rules. There are currently no specific rates for hybrid cars. But what happens if you’re driving a company car for your business mileage? I am considering purchasing an Electric Car. Search AccountingWEB . A company car is seen as a perk, or a benefit-in-kind, by HMRC and taxed accordingly as if it were extra income. Otherwise, HMRC will treat any excess as taxable and the employer will be required to pay Class 1 National Insurance. HMRC's guidance does not address what is accepted to be making good in full where the car is a hybrid car. Electricity is not a fuel for car fuel benefit purposes. View more . Although HMRC agreed to adopt the AER for fully electric vehicles it didn’t accept any changes for hybrids. Mileage Allowance Relief (MAR) - electric and hybrid cars are treated in the same way as petrol and diesel cars. Earlier this year, the Government revealed electric vehicles will be exempt from company car tax in the 2020/21 tax year. The advisory electricity rate for fully electric cars is 4 pence per mile. Summary of Electric Car Tax Benefits. HMRC recommends plug-in hybrid and hybrid car drivers use AFRs according to the amount of fuel the engine uses. Claiming mileage for a hybrid . But perhaps it’s more informative to look at your actual average mileage if you are considering an electric car. 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. 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. 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. And this is explained in more detail below. The advisory electricity rate for fully electric cars is unchanged at 4p per mile. The advisory fuel rates for petrol, LPG and diesel cars are shown in these tables. a car, van, bicycle or motorbike. That means the company can pay the employee 4p per mile for every business mile travelled in the electric car without any tax consequences. A - Use the relevant petrol or diesel figure. 7th Dec 2020. 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