Mileage rate - 45p. Will it change?

Petriix

Grumpy_chap said:

DrEskimo said:

• Car purchased 2019, £14,500. Current value £13,000: Depreciation £450/year

I do wonder how valid it is to consider on-going extremely low depreciation, for both ICE and EV cars?

Ultimately it comes down to a nice little bonus for those who bought at the optimal time. My MG5 came with a £3k government grant and a £4k manufacturer discount. With demand for EVs increasing exponentially and manufacturers struggling to make them fast enough, I can't see a return to those kind of discounts. So I treat it as a one off bonus. Orders are now closed for the current models of all MG EVs with a new MG5 facelift coming later this year, possibly next, with prices around £7k more than when I bought.

Who knows what incentives will exist in the future and whether supply chain issues will be resolved in the face of growing demand. I suspect that second hand EVs are going to be in great demand for a long time, especially because there are ultimately very few of them out there in the scheme of things.

I think it's more relevant to look at what's actually leaving your account each month rather than attempting to measure depreciation at all.

DrEskimo

Grumpy_chap said:

DrEskimo said:

• Car purchased 2019, £14,500. Current value £13,000: Depreciation £450/year

Your figures overall were very interesting. 

I do wonder how valid it is to consider on-going extremely low depreciation, for both ICE and EV cars?

It really is not long ago that cars couldn't be given away.  From memory, threads on here included ex-demo / pre-reg Astra for £11k (March 2021), Scala lease at £4k for two years (July 2021) and I was offered a whopping discount on an ES (Sept 2021).

Today, discounts are impossible and the wait is a year or more.

I would like to think that car manufacturers have competent management so they will be developing production plans on the basis that Covid and Ukraine war are "baked in" realities that they need to manage supply-chain, manufacturing and logistics to consider as part of their business need.  This will allow production to recover to normal levels.

If that recovery in supply capacity coincides with a tightening of spending because of the cost of living pressures (which do seem to be impacting globally), then the risk is a perfect storm moving from over-demand to over-supply.  That would result in offers to shift new cars and then used cars have to depreciate also.

Just a thought.

Oh it's got to end soon. I am already seeing drops from £14k a couple of months back to £13k today. In reality, I know these early battery owned 41kWh Zoes are rare, but I would still be pretty happy with £11/12k. So around double the depreciation figure I currently have.

Even still, the overall cost per mile would be compelling.

Bigphil1474

The tax free allowance of 45p per mile takes into account all the costs of motoring, not just how much it costs someone driving around in an old cheap motor. Some businesses require a car less than 5 years old, some don't care. I would be highly surprised if HMRC came to a figure of 45p per mile back in 2011 because they considered it would give a handy profit margin to people using their car for work. 
I used to drive old bangers and the economics of it were great. Little depreciation meant I was quids in. These days I prefer something a little more enjoyable to drive, and reliable, so depreciation costs are a bit higher. Also, most other costs have gone up, including buying the car in the first place. 
For info, the 45p per mile allows for about 12p per mile fuel costs. The rest is the cost of having and running a car minus fuel. 
If anyone's interested there is a parliamentary petition ongoing, currently with 13k people signed up:-

https://petition.parliament.uk/petitions/600966 

silvercar

That 45p per mile is only 5p per mile for electric vehicles. I doubt anyone has access to electricity that works out at 5p per mile! 

Driving a Tesla on the capped electricity rate (home charging) works out about 7p a mile.

MX5huggy

silvercar said:

That 45p per mile is only 5p per mile for electric vehicles. I doubt anyone has access to electricity that works out at 5p per mile! 

Driving a Tesla on the capped electricity rate (home charging) works out about 7p a mile.

No it’s not. The 5p rate is the advisory rate for reimbursement of company car drivers who pay for their own fuel (either where they use company fuel for private mileage or personal fuel for company mileage the other way) the equivalent rates for ICE are between 9p and 25p. EV’s get 45p a mile tax relief just like ICE for using a private car. 

https://www.gov.uk/guidance/advisory-fuel-rates

But as I’m pay 5p a kWh for over night charging of my EV which does around 3.5 miles per kWh costs 1.43p per mile, my deal ends at the end of the month and I move to 7.5p so 2.14p per mile. 

Grumpy_chap

silvercar said:

That 45p per mile is only 5p per mile for electric vehicles. I doubt anyone has access to electricity that works out at 5p per mile! 

Driving a Tesla on the capped electricity rate (home charging) works out about 7p a mile.

That's simply not correct.

ComicGeek

MX5huggy said:

silvercar said:

That 45p per mile is only 5p per mile for electric vehicles. I doubt anyone has access to electricity that works out at 5p per mile! 

Driving a Tesla on the capped electricity rate (home charging) works out about 7p a mile.

No it’s not. The 5p rate is the advisory rate for reimbursement of company car drivers who pay for their own fuel (either where they use company fuel for private mileage or personal fuel for company mileage the other way) the equivalent rates for ICE are between 9p and 25p. EV’s get 45p a mile tax relief just like ICE for using a private car. 

https://www.gov.uk/guidance/advisory-fuel-rates

But as I’m pay 5p a kWh for over night charging of my EV which does around 3.5 miles per kWh costs 1.43p per mile, my deal ends at the end of the month and I move to 7.5p so 2.14p per mile. 

Absolutely - I'm averaging 4.0 miles/kWh over the year. I do about 50% free from my solar PV system, and the rest at 7.5p/kWh (fixed until May 2023) - so around 1p per mile. If I 'have' to use a public charger then the company pays this directly, with no tax impact on me personally.

The company pays 5p/mile, so I make an additional £400/year on this. This is more than I pay in company car tax, so my EV is completely free to me. Even if I didn't have the PV system I could still make £200/year, and offset more than half my company car tax.

Very specific situation though with company car + tax relief + innovative tariffs - not sure that this is going to continue for too long, so a case of making as much savings as possible now. 

What doesn't work is if an employee pays for public charging at 60p/kWh, and then can only get reimbursed for 15-20p/kWh. But any decent employer would just cover the charging costs directly or indirectly, as you can pay more than the advisory rates if you can justify it.

diystarter7

You are lucky to be getting that. Years ago whenI worked for an outfit they took away the car allowance and people were saying they would not use their cars and I said I would as I could not do buses and meet targets for turnover of work. They took away the car allwance and guess what, no one stopped using their car

With respect OP, see it as a bonus rather than a negative as the it still works massively in your favour.

caprikid1

To be honest I drive an old Golf and have just come back from a 450 mile round trip.

Hire car cost plus fuel came to less than I could claim on my own car, I reckon I would make £90, I am just not willing to put 450 miles on my car for £90.

KDelve

I have just written to my MP, I am guessing that they are trying to push people to electric but it is simply not a option for me.  I am a freelance florist and cannot afford to spend £36,000 on the new electric equivalent of my current vehicle, I often travel more than the average 200 miles (average miles for electric charge) to remote rural locations with no charging point, and return often late at night when as a lone female I don't want to stop at some remote garage to charge and get home.  write to your MP is my suggestion