2026 is the year electric car mileage claims actually changed. HMRC raised the approved mileage rate for privately owned cars from 45p to 55p per mile in April, the first increase in 15 years, and kept its dual-rate system for company EVs: 7p per mile for home charging and 15p per mile for public charging.
Get those numbers mixed up and you either underpay your staff or create a taxable benefit you didn't mean to.
The single most common mistake we see is applying the wrong set of rates entirely. So before anything else, answer one question: is the electric car personally owned, or is it a company car? Everything about your claim flows from that.
Using Your Own Electric Car for Business: The 55p Rate
If an employee, director, or business owner uses their own electric car for business journeys, the Approved Mileage Allowance Payment (AMAP) rates apply, and from 6 April 2026 those are:
- 55p per mile for the first 10,000 business miles in the tax year
- 25p per mile after that
There's no separate AMAP rate for electric cars. A personally owned EV is treated exactly like a petrol or diesel car, which is genuinely good news for EV owners: 55p per mile is the same reimbursement whether your fuel costs 15p a mile or 4p a mile. An employee doing 10,000 business miles in their own EV, charged mostly at home, receives £5,500 tax-free while spending a fraction of that on electricity.
Two points worth acting on:
Employers can top up mid-year. Anyone reimbursed at the old 45p rate for miles driven since 6 April 2026 can be paid the 10p difference retrospectively without tax consequences.
Underpaid employees can claim relief. If an employer pays less than the approved rate, say 35p per mile, the employee can claim Mileage Allowance Relief on the 20p shortfall through their tax return. Plenty of people leave this money on the table every year simply because nobody told them the relief exists.
Sole traders using simplified expenses follow the same flat rates, though once you pick the flat-rate method for a vehicle you generally have to stick with it, so it's worth comparing it against claiming actual running costs before committing. That comparison is a routine part of what our tax accountants work through with self-employed clients, because the better option depends entirely on your mileage and vehicle costs.
Company Electric Cars: The 7p and 15p Advisory Electric Rates
Company cars are a different system altogether. Here HMRC's Advisory Electric Rate (AER) applies, and since 2025 it has been split in two:
- 7p per mile where the car is charged at home
- 15p per mile where the car is charged on the public network
These are the rates confirmed from 1 June 2026 (the public rate rose from 14p to 15p in the March update). HMRC reviews them quarterly, on 1 March, 1 June, 1 September and 1 December, and employers can keep using the outgoing rates for up to one month after each change.
Reimburse at or below the correct AER and there's no taxable benefit and no Class 1A National Insurance. Pay above it without evidence of higher actual costs, and the excess becomes taxable earnings with NIC attached. The same rates work in reverse too: if the business pays for all charging, employees repay private mileage at the AER to avoid a benefit charge.
If a driver charges both at home and on public chargers, the mileage has to be apportioned between the two rates, which means charging records matter as much as mileage records now. And one quirk worth knowing: electricity isn't classed as a fuel for car fuel benefit purposes, so fully electric company cars never trigger the car fuel benefit charge that catches petrol and diesel drivers who get private fuel paid for.
Hybrids, by the way, don't use the AER at all. They're treated as petrol or diesel cars under the standard Advisory Fuel Rates.
Where the Rates Fall Short of Reality
Here's the honest problem with the AER, and the part most guides skip: the 15p public charging rate frequently doesn't cover what drivers actually spend.
Rapid chargers on motorway routes commonly cost 75p to 89p per kWh. Depending on the car's efficiency, that works out around 20p to 22p per mile in real running cost, well above the 15p reimbursement. An employee doing long business journeys on rapid chargers is effectively subsidising their employer's travel out of their own pocket.
Home charging is the opposite story. A car achieving roughly four miles per kWh on an overnight tariff of about 7p per kWh matches the 7p rate almost exactly, and drivers on cheap EV tariffs can even come out slightly ahead. But charge that same car at daytime rates above 30p per kWh and the 7p rate falls short again.
HMRC's answer is that the rates are advisory, not mandatory. Employers can pay a higher rate if they can evidence the actual electricity cost per mile. In practice that means keeping charging receipts and calculating a defensible cost-per-mile figure, which is more admin, but for a field-based team doing heavy public-charging mileage it's the difference between a fair policy and a quiet pay cut. If your business runs EVs and hasn't reviewed its reimbursement policy since the dual rate came in, this is the year to do it. Our accounting services for businesses include reviewing mileage and expense policies so reimbursements stay tax-free and staff aren't left out of pocket.
What to Do Now
For business owners: confirm which of your drivers are in personal cars versus company cars, update payroll and expense systems to the 55p AMAP rate and the current 7p/15p AERs, and set a reminder for each quarterly AER review, because using a stale rate is exactly the kind of thing an HMRC employer compliance check picks up.
For employees: log every business journey with the date, purpose, start and end points, and miles, plus how the car was charged if it's a company EV. Those records support your claims and protect you if HMRC ever asks.
And if you're not sure whether your current setup is compliant, or you suspect you've been under-claiming, speak to our team and we'll check your position. Mileage looks like small money per trip, but across a year and a team it adds up to thousands of pounds, and it's one of the easiest things in the tax system to get quietly wrong.
