With the

rise in electric vehicle adoption

across the globe, finance teams and business travellers alike have questions about mileage allowances for electric cars.Is there a standard mileage rate for electric cars? Does the finance department need to have its own policy that covers mileage allowance for electric cars? Do reimbursement rates differ if an employee uses their personal car vs a company car?Here, we answer the most important questions surrounding mileage allowances for electric cars.

Yes, employees can claim mileage for electric cars.However, businesses should be aware of several factors surrounding mileage allowances for electric cars.For example, in the U.K., the government has already reduced the allowance per mile to account for the cheaper running costs of electric cars.In other countries, like the U.S., there is currently no separate policy that covers mileage reimbursement rates for electric cars (we go through this in more detail below), which means you might need to consider creating your own reimbursement policies.

The mileage rates for electric cars differ across each country. While some countries are further ahead in the development of comprehensive policies, others are still fine-tuning the details.Below, we take a look at the mileage reimbursement rates for electric cars in the United Kingdom and the United States.

Unlike many other countries, the U.K. has developed a policy that covers electric car reimbursement rates. This has in part been spurred by the government’s proposal to

ban sales of all new petrol and diesel cars

by 2030 (some hybrid cars will remain on sale until 2035). This also means that many businesses and employees are already investing in electric cars.

When employees use their own electric cars for business use, the tax-free Mileage Allowance Payments (MAPs) are the same as those for petrol and diesel cars.The HMRC (the U.K.’s tax authority) has currently set this rate at 45 pence per mile for the first 10,000 miles, and 25 pence per mile for any additional mileage. Plus, the employee can also claim 5 pence per mile for each passenger that travels with them on a business trip.If an organisation decides to set its own reimbursement rates lower than the MAP rates, employees can still claim the difference in tax relief from HMRC.

If you have provided your employees with electric company cars, the advisory electricity rate (AER) is

5p per mile

. The company can then reimburse the employee 5 pence for every business mile travelled.

Each year, the IRS sets a mileage reimbursement rate for gas-powered vehicles, which stands at

62.5 cents per mile driven for business use

for the final 6 months of 2022.However, since the IRS has yet to set mileage reimbursement rates for electric vehicles, you’re likely curious as to how to manage your mileage reimbursement processes and how to set a mileage allowance for electric cars.The answer is quite simple. Currently, with no official information from the U.S. government on separate rates, it’s safe to assume that businesses can use the same reimbursement rate for electric car mileage that they apply to gas-powered vehicles, or create their own policy covering mileage claims for electric cars.