Understanding the New HMRC Mileage Rules for Electric Vehicles: What Employers Need to Know

With the rise in electric company cars, HMRC has recently updated its guidance on how mileage claims should be calculated, particularly when electric vehicles (EVs) are charged in more than one location. These apply when an employee is using a company-provided electric vehicle (i.e. one owned or leased by the employer), and is being reimbursed for business travel costs.

From September onwards, a new two-rate system has come into effect for reimbursing business mileage in electric vehicles, and it’s important for employers and payroll teams to understand how to apply it fairly and correctly.

Two different rates depending on charging method

The advisory fuel rates now differentiate between:

• 8p per mile when the EV is charged at the employee’s home

• 14p per mile when the charge comes from a public or commercial charging point

The higher rate reflects the fact that public charging, especially at places like motorway service stations, typically costs more than domestic electricity.

What If both charging types are used?

In real-world scenarios, employees may not rely solely on one type of charging. For instance, they may begin a business trip with a home charge, but need to top up at a public station during the return journey.

HMRC has addressed this by allowing employers to apportion the mileage rate between the two, depending on how much of the vehicle’s battery was charged at home versus at a public point.

How to apportion fairly

There’s no fixed formula.  HMRC simply asks that any method used is “fair and reasonable.” Some practical ways to do this include:

• Estimating based on the number of miles driven after each charge

• Using the kilowatt-hours added at each charging point

• Applying a percentage split based on charging sessions

The key is to apply the method consistently and keep a clear record of how the mileage reimbursement was calculated.

Why It Matters

For employers, this change adds a layer of complexity to EV mileage claims, but also presents an opportunity to refine internal expense policies. Ensuring that reimbursement aligns with HMRC’s latest guidance will not only support compliance but also help manage costs transparently.

Article written by Heather Langtree