HMRC have published advisory rates for all electric company cars and now accept that if you pay up to 4 pence per mile when reimbursing your employees for business travel in a fully electric company car there is no profit for income tax or earnings for NI purposes.

The announcement marks a U-turn in policy; in December 2017 as part of the Taxation of employee expenses: response to the call for evidence, the Government announced it had no plans to change the current system and in particular it would not introduce specific rates for hybrid and electric cars.

  • From 1 September 2018, employers can pay up to 4p per mile for business travel in an electric company car  or 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.
  • Hybrid cars will continue to be treated as petrol or diesel models.


Advisory fuel rates (company car drivers)

Company cars


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