Is there still mileage in electric vehicles for businesses?

Electric cars have been back in the news recently with EVs now subject to road tax for the first time from April 2025.  

Many companies have introduced salary sacrifice schemes to allow employees to drive an electric car while giving up some of their salary.  Others have moved towards providing electric cars where they still have a company car scheme.

There are a few things you should be aware of in relation to having a EV strategy in your company car scheme:

As with all schemes, employees will be able to claim back business miles specifically for work related purposes.  This is not for daily commuting or personal mileage. 

EV mileage claims work the same as they would for fuel cars, currently the HMRC advisory rate is 7 pence per mile that can be claimed by an employee per mile for business use in an EV company car.  Employee’s using a private EV car can use the same official HMRC rates as petrol or diesel cars. 

Employers can pay above this but they must disclose it to HMRC via a P11D and will be taxed as part of an employees salary. 

A Company car is a benefit in kind and employee will pay income tax on the benefit in kind (BiK). 

For electric vehicles, which have zero CO2 emissions, the BIK rate is significantly lower compared to petrol or diesel cars.  HMRC will calculate the BiK rate for zero-emission vehicles for 2025/26 at 3% of the list price.

The question of “Where can the car be charged?” also arises. 

• Firstly: EVs can be charged directly at work if the necessary charging infrastructure is in place.  Electric vehicle drivers of company cars (not those owned by the employee) do not have to pay fuel benefit tax for any electricity paid for by their employer, even if it’s for personal use.
• Secondly: Installing a vehicle charging point at home of an employee is not a taxable benefit in kind. 
• Thirdly: if an employer pays for charge cards for use at public charging points, these don’t count as a taxable benefit either.

As we progress towards a more sustainable future, understanding the nuances of electric car mileage rates and reimbursement policies will become increasingly important for businesses and employees. By staying informed about HMRC guidelines and leveraging modern fleet management tools, organisations can efficiently manage their electric vehicle fleets while ensuring fair compensation for their employees’ business travel.

Keep a look out nearer the time for more news on the proposed government changes for Benefit in Kind to be reported through Real Time Information from April 2026.

If you need to introduce a Driving EV Vehicles Policy into your organisation, please contact us on 01527 909436.