For an employer, the mileage allowance for electric cars is a policy question with three answers, one per way the car is provided. A driver's own electric car earns the approved mileage allowance, tax free up to 55p a mile for the first 10,000 business miles and 25p after. A company electric car, including one provided through salary sacrifice, is reimbursed for electricity at the advisory electricity rates, 7p a mile charged at home and 15p in public. And a fleet that pays a single rate to both kinds of driver has a reporting problem. This page is written for the fleet or payroll manager writing the electric car policy: what to pay for each, what each creates in payroll, and how to word the claim form.
Private electric cars
The approved rate, with the 10,000 mile threshold, tax free and unreported up to the approved amount; a lower rate is allowed and leaves the driver a relief claim; a higher rate creates taxable pay for the excess. An electric car does not change any of this. A driver whose car is funded by a cash car allowance is in this class, however the allowance is described.
Company electric cars
Electricity only, at the advisory electricity rates, home or public according to where the business miles were charged. Paying at or below the rates needs no evidence beyond the log; paying above them is taxable unless the true cost per mile is shown. There is no fuel benefit charge for electricity, so an employer that pays for all the car's charging, at home, at work or in public, creates no benefit on the electricity.
Salary sacrifice electric cars
A salary sacrifice car is a company car for every purpose here: the benefit in kind at the zero-emission percentage, the electricity rates for business miles, no approved mileage allowance. Drivers moving from a private car to a salary sacrifice EV often keep claiming the approved rate, and the excess over the electricity rate is taxable pay from the first claim after the car arrives.
The claim form and the reporting
Ask whose car it is and how it is charged. Private car: approved rate, running total against the threshold. Company car: electricity rate, home and public miles separately. Excess payments over either ceiling go through payroll as earnings with National Insurance; payments within them are not reported, and the log is kept. The worksheets on this site work both figures for any claim.
Questions people ask about mileage allowance electric cars
Can we pay a private EV driver less because charging is cheap?
You can pay any rate, but the approved rate is the driver's entitlement for relief purposes: a lower rate leaves them a mileage allowance relief claim on the shortfall.
Do we report electricity paid for a company EV?
No benefit arises on electricity for a company car, so there is nothing to report on the charging itself; only payments above the advisory rate for business miles would be taxable pay.
Does a workplace charger for staff's own EVs create a benefit?
Not where charging is available to all employees at or near the workplace; that exemption is separate from the mileage rates.