Many business owners are curious about if you can you claim mileage on electric cars.
With the rising popularity of electric vehicles, particularly Tesla and other electric car models, more entrepreneurs are considering incorporating them into their business operations. In this blog post, we explore the tax advantages and potential savings associated with using electric cars for business purposes.
- Tax Savings with Electric Cars: When you utilize an electric car for business purposes, several tax benefits can help you save money. Firstly, you can typically reclaim or save tax on the lease costs of the electric vehicle. This means that you don’t have to use personal funds to pay for the car, allowing you to potentially save on dividend tax as well. Furthermore, electric cars generally have lower company car tax rates compared to petrol or diesel vehicles, resulting in significant savings.
- Mileage Reimbursement for Charging: One lesser-known aspect that many people overlook is the ability to claim mileage for charging your electric car. The government sets an approved mileage rate, which is currently around 5 pence per mile (PMR). However, it’s important to note that some individuals find this rate insufficient to cover the actual cost of electricity used for charging their vehicles.
- Override the Government Rate: The good news is that you have the flexibility to override the government-approved rate for mileage reimbursement. If the actual cost of charging your electric car is higher than the standard rate, which is often the case due to rising electricity prices, you can use a higher rate, such as 17 PMR, as long as you maintain proper calculations and documentation. This adjustment allows for a more accurate representation of the actual expenses incurred for charging your car during business journeys.
- Home Charging Expenses: Additionally, even if you charge your electric car at home, you can still claim mileage for the cost of charging. By factoring in the true cost of charging your vehicle, rather than relying on the government’s lower rate, you can ensure that your reimbursement aligns with the actual expenses you incur.
Electric cars present an attractive option for business owners aiming to reduce motoring costs while embracing sustainable transportation. By incorporating electric vehicles into your business operations, you can enjoy substantial tax savings, including reclaiming lease costs, lower company car tax rates, and mileage reimbursement for charging your car. Remember to consider overriding the government-approved mileage rate if it doesn’t accurately reflect the actual cost of charging. Embrace the benefits of electric cars for your business and explore further resources on our website for strategic guidance and expert advice.
To learn more and discuss your specific situation, visit our website at accounting.co.uk and book a strategy session.