EV Business Car Drivers Punished by UK Mileage Rate

EV business car users are ending up financing their company’s commercial journeys because of the way the UK government’s flat-rate reimbursement plan.

Research from charging payment specialist Mina has warned that unless there is a change to the way drivers are reimbursed for business miles many employees will reject an EV as a business car. This would slow the transition to EVs in time for the government’s 2030 deadline banning the sale of new ICE powered vehicles.

The tax office, HMRC, applies the Advisory Electricity Rate (AER), which is a simplistic flat rate for paying back business mileage and at 5p (5.6¢) a mile has remained the same despite recent soaring electricity prices. Mina’s real-world data claims that this summer alone, home charging costs increased 30% and public charging 19%. As a result 94% of journeys charged at home cost more than the AER and 100% of those charged in public cost the driver more.

In some cases employees were out of pocket by as much as 17p (19¢) per mile if they charged in public, equivalent to £17 ($19) over a 100-mile journey, or personally subsidizing £1,700 ($1,900) over 10,000 miles a year. Even when charging exclusively from their homes, the study suggests the average business driver would pay out £400 ($449) of their own money for business travel.

Employers can offer to pay more than the advisory rate but in order to do this and not incur any benefit-in-kind tax on that extra amount, they have to prove why they have used their own rate with evidence of each charge.

Ashley Tate, Mina CEO and co-founder, said: “Businesses account for around two-thirds of all EVs on the road, but the Government is risking the success of the transition to electric with the outdated method of paying these hard-working drivers. Those already in EVs will want to know why they are personally subsidizing their business travel, while employees about to make the switch to electric may refuse once they realize they will be losing financially on every work trip they make.

“Our data shows that the AER is completely unfit for purpose, because it just does not reflect the cost of real-life electric driving. The issue is that charging is not a simplistic, one-size-fits all process, as filling a tank with petrol and diesel is. Homeowners are all on varying tariffs, and within those tariffs the costs can be different at different times of the day.”

— Paul Myles is a seasoned automotive journalist based in Europe. Follow him on Twitter @Paulmyles_

Leave a comment

Your email address will not be published. Required fields are marked *