Travel in own vehicle

Overview 🚖

When a director or employee uses their own vehicle for business travel, the company may reimburse them at HMRC’s approved mileage rates. These rates are designed to cover fuel, maintenance, wear and tear, and other running costs.

Using the approved rates keeps things cleaner from a tax perspective and helps avoid creating a taxable benefit.

📊 Approved Mileage Rates

If an employer reimburses above these rates, the excess amount is treated as a benefit in kind. The individual must pay Income Tax and NICs on that excess.

🔗 HMRC: Claim tax relief for business mileage

⚡ Electric Vehicle (EV) Mileage Rates

From 1 September 2025, HMRC introduced new Advisory Electric Rates (AERs) for EV reimbursements. These distinguish between home charging and public charging to reflect actual costs more accurately.

• Home charging: 8p per mile (previously 7p)
• Public charging: 14p per mile (new separate rate)

This replaces the previous flat electric rate.

⚠️ Note: The new rates do not fully reflect ultra-rapid charging costs, which tend to be significantly higher. Businesses should consider the difference when reimbursing.

💡 Best Practice for Reimbursement

• Stick to the approved rates to avoid taxable benefits.
• Maintain detailed mileage logs: date, purpose of journey, miles traveled.
• Avoid paying directly for fuel (or electricity) for private use, since it’s hard to separate personal/business use and may incur a high tax charge.
• When reimbursing EVs, segregate home vs public charging to align with the new HMRC rates.

✅ Summary

• Use HMRC’s approved mileage rates for petrol/diesel vehicles (45p / 25p) and new AERs for EVs (8p / 14p).
• Reimbursements above these rates are taxable.
• Keep accurate records.
• Avoid direct reimbursements for private fuel or electricity where possible.