Manage business mileage expenses for electric cars

Electric company car drivers can now claim five pence per business mile. Great news…or not?

The 25% rise in the HMRC advisory electricity rate (AER), from four to five pence per mile, was gratefully received in November 2021 by the Association of Fleet Professionals and British Vehicle Renting and Leasing Association. Both have electric company vehicle drivers' best interests at heart - lobbying last year for this first revision since the introduction of the AER in 2018.

The increase has opened the door to further reviews of this rate – a positive step in helping businesses and drivers who are moving towards electrification. However, in the meantime, the sharpest gas price increase in thirty years, which also took place last year, is set to have a knock-on effect of, on average, 35% on electricity bills from April 2022.

The financial impact of this rise, together with the varying costs of charging electric vehicles across home, work and public charge points, mean that most electric company car drivers claiming the advisory electricity rate will still be significantly out of pocket. With large electric van drivers needing up to three times more in real-world reimbursement.

Is a company EV business mileage reimbursement policy the answer?

There’s no doubt the answer might be yes for your business. Setting your own mileage rate will ease your conscience, knowing your drivers won’t foot the bill for business travel. However, for many, trying to work out an exact rate that compensates for the variable prices across charging networks is a headache at the very least and may still leave drivers at a loss. For example, with pay as you go bp pulse7 7kW or bp pulse50 50kW chargers, they would pay 6.7 or 9.7 pence per mile respectively. Whereas charging at an Ionity 50-350kW unit would cost them twenty-three pence per mile.

Any private mileage would then have to be logged by the driver and the energy costs deducted from their salary. This means relying on your company vehicle drivers to separate the two sets of mileage and a significant amount of admin for your payroll team.

Drivers using their own electric vehicles for business mileage are entitled to the standard approved mileage allowance payments of forty-five pence per mile or twenty-five pence per mile after ten thousand miles. This has to cover all wear and tear – as with their petrol, diesel and hybrid counterparts.

How can I take control of my business’s electric car mileage expenses?

The short answer is to reduce, or completely eliminate, the whole rigmarole of claiming back expenses. How? Provide your electric company car and grey fleet drivers with solutions that keep your business in the driver’s seat – with less admin for everyone.

1. Fuel and electric charging card for mixed fleets

As a business with a mixed fleet, you’ll know that the cost of charging an electric vehicle – whether at home, work or on the go – can be cheaper in pence per mile than running petrol, diesel and hybrid vehicles. However, you’ll also be aware of the many reasons time and consideration are needed before you can fully electrify your fleet.Instead of your finance team receiving multiple expense sheets across your different vehicle types, a mixed fuel and electric charging card will keep everything in one place. For example, the BP Fuel & Charge Card includes:

• Centralised billing – with electric, hybrid and ICE mileage all on one dashboard

• One supplier – huge admin savings with one integrated solution for your entire fleet

• Integration with other bp pulse solutions – again with a centralised view and billing

• One card for all drivers – with access to 3,400 forecourts and 8,000 pulse points

• 24/7 support – our team is here to help as you transition to electric