EV salary sacrifice - considered your 'own' car for mileage tax relief?

OutofthisWorld

As title, I do a lot of business miles so over the course of a year this would make a difference.

Is an EV leased via company salary sacrifice programme considered your 'own' vehicle by HMRC and thus can claim 45ppm for business journeys for first 10,000 miles.

As I understand, the agreement is between the lease company and I, so in theory not a company owned vehicle, however I've seen conflicting discussions on other forums...

Many thanks if anyone has asked this before and has a clear answer! It tips the balance of affordability as I'll do over 10k business miles a year and the tax relief would offset the salary sacrifice cost to some degree given low(er) cost to run an EV.

Grumpy_chap

OutofthisWorld said:

As title, I do a lot of business miles so over the course of a year this would make a difference.

Is an EV leased via company salary sacrifice programme considered your 'own' vehicle by HMRC and thus can claim 45ppm for business journeys for first 10,000 miles.

As I understand, the agreement is between the lease company and I, so in theory not a company owned vehicle, however I've seen conflicting discussions on other forums...

Many thanks if anyone has asked this before and has a clear answer! It tips the balance of affordability as I'll do over 10k business miles a year and the tax relief would offset the salary sacrifice cost to some degree given low(er) cost to run an EV.

When you did the SS, your employer should have given you a revised contract (or an amendment note) which will set out clearly how the car is treated.

However, the whole benefit of an EV via SS is that you sacrifice some of your salary and in return receive an EV on lease that is subject to EV BIK at the low rate of 2% of P11d value.  The alternative would be to sacrifice the income in return for the car but still be taxed as though the income was regular salary.

Which tax system are you under?
If you have accepted the EV is a company car in terms of your income tax position and happy to have that win then you need to accept it is a company car for other purposes also.

Does your employer pay you for business mileage at any rate?  Is that rate equal to the AMAP (for EV)?  If not, there may be a claim for the difference between the "fuel" (energy) rate paid and the AMAP.  That claim would only be the tax at the appropriate marginal rate, HMRC don't refund the full difference.

Grey_Critic

Mileage allowance drops to 25 pence per mile over 10,000 miles - No idea if the same rates apply to EVs

OutofthisWorld

Grumpy_chap said:

OutofthisWorld said:

As title, I do a lot of business miles so over the course of a year this would make a difference.

Is an EV leased via company salary sacrifice programme considered your 'own' vehicle by HMRC and thus can claim 45ppm for business journeys for first 10,000 miles.

As I understand, the agreement is between the lease company and I, so in theory not a company owned vehicle, however I've seen conflicting discussions on other forums...

Many thanks if anyone has asked this before and has a clear answer! It tips the balance of affordability as I'll do over 10k business miles a year and the tax relief would offset the salary sacrifice cost to some degree given low(er) cost to run an EV.

When you did the SS, your employer should have given you a revised contract (or an amendment note) which will set out clearly how the car is treated.

However, the whole benefit of an EV via SS is that you sacrifice some of your salary and in return receive an EV on lease that is subject to EV BIK at the low rate of 2% of P11d value.  The alternative would be to sacrifice the income in return for the car but still be taxed as though the income was regular salary.

Which tax system are you under?
If you have accepted the EV is a company car in terms of your income tax position and happy to have that win then you need to accept it is a company car for other purposes also.

Does your employer pay you for business mileage at any rate?  Is that rate equal to the AMAP (for EV)?  If not, there may be a claim for the difference between the "fuel" (energy) rate paid and the AMAP.  That claim would only be the tax at the appropriate marginal rate, HMRC don't refund the full difference.

Thanks, I've very clear on how mileage tax relief works and have done so for decades, my question is specifically if a SS EV vehicle is classed as your own car or a company car.

I'm currently choosing what to do - not in any scheme at the minute (I have a car allowance and running personal car). I don't follow your 2 options though. The 2 options I have are (other than keep my person car) are  - go for a company car (I forfeit my car allowance and get a company car, a vehicle my company owns, and I pay BIK on it at the relevant rate, my employer pays be AMAP mileage and that's all I get). Option 2 - i keep my car allowance and choose my own vehicle under my employers SS arrangement. The net cost is very similar. But in planning my assumptions and calcs, I need to know if I claim tax relief on the difference between AMAP and 45p per mile for first 10k miles if I go for a SS EV vehicle, this is worth in the region of £1600 a year if I do 10,000 business miles a year, as my employer would only reimbursed me c. 5p a mile for an EV (claiming tax on the 40p difference equates to £1600 a year at 40% tax rate).

I haven't made the choice yet so haven't got line of site of any contractual terms.- Factoring in the potential £1600 return in tax relief sways the argument somewhat. If i couldn't claim that, the company car is always going to be more cost effective.

Grumpy_chap

AMAP rates for full car costs (private car) are the same for EV as ICE:
https://www.rac.co.uk/business/news-advice/business-mileage-rates-for-electric-vehicles

"Fuel" only rates are lower:
https://www.gov.uk/guidance/advisory-fuel-rates

If the OP has the company car but is not paid any mileage, then the OP can claim the tax relief against the "fuel" rates.

Grumpy_chap

OutofthisWorld said:

The 2 options I have are (other than keep my person car) are  - go for a company car (I forfeit my car allowance and get a company car, a vehicle my company owns, and I pay BIK on it at the relevant rate, my employer pays be AMAP mileage and that's all I get).
Option 2 - i keep my car allowance and choose my own vehicle under my employers SS arrangement. 

They are two quite odd options to be offered.  From a tax perspective, they are both considered in the same way.

You currently have:
 - Salary
 - Car allowance (treated as extra salary for tax and NI)
 - Own car.
Is that correct?

Under your Option 1, you would have:
 - Salary
 - No car allowance (sacrificed)
 - Company car subject to BIK

Under your Option 2, you would have:
 - Salary
 - Car Allowance (treated as extra salary for tax and NI)
 - Salary sacrifice £xx
 - Company EV (funded from the SS) subject to BIK

The decision between Option 1 & 2 would come down to:
 - Can you still have an EV under Option 1?
 - Is the Car Allowance greater or less than the SS £xx?

OutofthisWorld said:

 if I do 10,000 business miles a year, as my employer would only reimbursed me c. 5p a mile for an EV 

The EV via SS (or via sacrificing the car allowance) will be treated as a company car.
If the 10k miles will be reimbursed at 5 pence per mile, that is lower than the current AMAP fuel rate 9 pence per mile from 1st March.
You can claim the tax relief against the gap of 4 pence per mile x 10k miles = £400, so £160 nett in your pocket for higher rate tax payer.

OutofthisWorld

The part I can’t square is that via SS it is not a company EV, it is a contract between me and the lease company, I could keep the car if I wanted to if I moved employer mid-lease term (or hand it back if that was my choice).

my car allowance would not completely cover the SS (at least for an EV I’d be happy with). 

I could select an EV as a company car (well 1 choice and not a choice I’d go with!!).

if it is classed as a ‘company’ car then so be it, no one seems to know for sure though! (Neither HMRC who I’ve already tried with no hope as they weren’t clear on Ev SS schemes…

Grumpy_chap

The following describes the way EV SS works:
https://www.carwow.co.uk/guides/buying/electric-car-salary-sacrifice#gref

It seems clear to me from reading that the EV is treated as a company car.  It is described in the tax savings and then the part about BIK.  If the EV was not a company car, there would be no BIK.

You seem to have mentioned that your employer will then pay 5 pence per mile so the possible tax relief on mileage would only be to the AMAP rate for EV which I mentioned up thread.

As this is now purely a tax question, you may wish to ask in the Cutting Tax forum.  Include a link to this thread for completeness.

DullGreyGuy

There are no special rules for EV when determining if it is or isnt a company car.

You say that only you and the leading company are in contract but isnt the company paying the monthly invoice? Presumably they are therefore recovering the 50% of the VAT that they are allowed to on a company vehicle and therefore it is a company car and company car mileage applies. Presumably you are not expecting to have to pay the monthly dues out of your net salary if your employer failed to pay in which case they are certainly in contract. It may however be structured with a master agreement between employer and lease firm then sub agreements between lease firm and employee but these attach to the master