It’s good to see the latest HMRC approved mileage allowance payments include those for electric cars for the first time. Mind you, they are for fully electric cars only, not hybrids. It’s a step in the right direction, but in December 17, as part of the Taxation of employee expenses: response to the call for evidence, (really good bedtime reading!), the Government announced it had considered the position and had no plans to change the current system; particularly it would not introduce specific rates for hybrid and electric cars. However, in August 2018 HMRC announced that from 1 September 2018:

  • They would accept that if employers pay up to 4 pence per mile when reimbursing employees for business travel in a fully electric company car there is no profit for income tax or earnings for NI purposes.
  • Employers can use their own rate if it better reflects circumstances, for example if their cars are more efficient, or if the cost of business travel is higher than the guideline rate.
  • If employers pay a rate that is higher than the advisory rate and cannot demonstrate the electricity cost per mile is higher, they must treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes

 Car and van mileage allowances

HMRC approved mileage rates from 1 September 2018

  • HMRC approved mileage allowance payments (AMAPs) can be paid tax and NI free to employees using their own cars, motorcycles or bicycles for business as shown in the table below
Vehicle type Amount per mile
Cars and vans, mileage up to 10,000 45p
Cars and vans, mileage over 10,000 (for NI the rate is 45p for all business miles) 25p
Motorcycles, all mileage 24p
Bicycles, all mileage 20p
Passenger (car or van, per passenger), all mileage 5p

 

Advisory fuel rates

  • Where an employee pays for all the fuel when driving a company car, the employer may reimburse them tax free for the cost of business mileage travelled at the rates shown in the table below. Similarly, where an employer has paid for all the fuel for a company car, the employee can avoid being subjected to a fuel scale charge (see above) by reimbursing the employer using the same rates.
  • The rates below apply from 1 September 2018, but may be amended at any time, but usually quarterly, by HMRC to reflect shifting fuel prices. The previous quarter’s figures are shown in brackets.

 

Engine size Electric
Any fully electric cars – NOT hybrids 4p

 

Engine size Petrol LPG
Up to 1,400cc 12p (11p) 7p (7p)
1,401 – 2,000cc 15p (14p) 9p (9p)
Over 2,000cc 22p (22p) 13p (14p)
Engine size Diesel
Up to 1,600cc 10p (10p)
1,601 – 2,000cc 12p (11p)
Over 2,000cc 13p (13p)