Electric Vehicle Tax Relief: What You Can Claim

A clear, sourced guide to what UK electric vehicle drivers can claim back from HMRC, whether you are self-employed, an employee using your own EV, or driving an electric company car. Current for the 2025-26 and 2026-27 tax years.

The headline: an EV gets the same mileage rate as petrol

If you claim simplified mileage, an electric car is treated exactly like a petrol or diesel one. You claim 55p per business mile for the first 10,000 miles in 2026-27 (45p up to 5 April 2026), then 25p after that. There is no lower "EV rate", and you are not penalised for driving electric. Where EVs really differ from petrol is in the actual-costs route, where a brand-new electric car can earn a 100% first-year allowance, and as a company car, where the benefit-in-kind charge is tiny.

Sole traders: two methods, choose carefully

As a self-employed driver you get tax relief on your car in one of two ways. You pick one per vehicle, and the choice is locked for as long as you keep that vehicle, so it pays to understand both.

Method 1: Simplified mileage (the usual choice for drivers)

Claim a flat rate per business mile: 55p for the first 10,000 miles in 2026-27 (45p before), then 25p. That single figure is designed to cover the whole running cost of the car, including the electricity to charge it, insurance, servicing, tyres, depreciation and road tax.

So you cannot also claim charging on top. Home charging, public charging, a new battery, none of it, because the mileage rate already accounts for it. What you can still claim separately are genuinely business-only costs the rate does not cover: tolls, parking, congestion and Clean Air Zone / ULEZ charges incurred wholly for work.

It is the simplest option and, for most high-mileage drivers with a cheap-to-run EV, usually the most generous too. No fuel receipts, just a mileage log.

Method 2: Actual costs (where the big EV allowances live)

Instead of a flat rate, you deduct the business-use proportion of your real running costs, plus a capital allowance on the car itself. For an EV the claimable running costs include:

• Home charging - the business share of your actual home electricity cost used to charge the car. The cleanest evidence is a smart charger or app that logs the kWh, priced at your real unit rate.
• Public charging - the business share of your charge-point receipts.
• Insurance, servicing, repairs, breakdown cover, road tax, all apportioned by business-use percentage (business miles ÷ total miles).

One thing to watch: HMRC's Advisory Electricity Rate (7p/15p per mile) is for company-car reimbursement, not for a sole trader's actual-cost claim. If you are self-employed on actual costs, use your real electricity cost, not the advisory rate.

The 100% first-year allowance on a new EV

This is the standout reason to consider actual costs for an electric car. A brand-new, unused electric (or 0g/km) car can qualify for a 100% first-year allowance, so you deduct the full purchase price against profit in year one, restricted to your business-use percentage. A £40,000 EV used 80% for business gives a £32,000 deduction in the first year. Compare that with a petrol car, which is written down slowly at 18% or 6% a year.

The allowance is available for expenditure up to 5 April 2027 (income tax), having been extended by a year. The catches: second-hand EVs and hybrids do not qualify; once you claim a capital allowance you can never use the mileage rate for that car; and a balancing charge usually adds much of the sale proceeds back to your taxable profit when you sell, which partly reverses the year-one benefit. Model both methods before you commit.

Charge point at home or work

A business installing an EV charge point can claim a 100% first-year allowance on the cost, also extended to 5 April 2027. If the charger at home is also used privately, the claim is restricted to the business-use proportion.

Using your own electric car for work

If you drive your own EV for your job, the rules are the same as for a petrol car, and they work in your favour.

Your employer can pay you up to the approved mileage rate (45p per mile for the first 10,000 business miles, 25p after) tax-free. There is no separate, lower rate for EVs.

If your employer pays less than the approved rate, for example a flat 25p or only the electricity cost, you can claim Mileage Allowance Relief on the shortfall through your tax return or a P87. Because the 45p rate has not changed in years while EV running costs are low, this relief is often well worth claiming.

The electric company car: the biggest EV tax break

This is where electric vehicles are dramatically tax-advantaged, and why salary-sacrifice EV schemes have taken off.

Benefit-in-kind is tiny on a zero-emission car

A company car is taxed as a benefit based on its list price times a percentage set by CO2 emissions. A zero-emission car gets the lowest band:

• 3% in 2025-26
• 4% in 2026-27
• 5% in 2027-28, then rising to 7% and 9% by 2029-30

Compared with 25% to 37% for many petrol and diesel cars, that is roughly a tenth of the tax. A £40,000 EV at 3% is a £1,200 taxable benefit, costing a 40% taxpayer about £480 a year. Even with the planned rises, EVs stay the cheapest band by a wide margin into 2029-30.

Salary sacrifice

You give up part of your gross salary for the use of an EV, so you avoid income tax and National Insurance on the sacrificed amount and pay only the small benefit-in-kind charge. Salary-sacrifice cars are normally caught by rules that cancel this saving, but ultra-low-emission cars (75g/km or less, which includes all EVs) are exempt, which is exactly why EV salary sacrifice is so popular.

Charging a company EV

The Advisory Electricity Ratelets the employer reimburse electricity tax-free: as of June 2026, 7p per mile for home charging and 15p per mile for public, reviewed quarterly.

Workplace charging is tax-free: charging your car at the employer's premises is not a taxable benefit. And since a 2023 change, an employer reimbursing the cost of charging a company car at your home is no longer a taxable benefit either. (Charging your own private car at home is a different story and generally is not covered.)

VAT on charging and buying an EV

Mostly relevant if your business is VAT-registered. The rules are not EV-friendly here, and home charging is the trap.

• Public charging is standard-rated at 20%, and a business can reclaim the VAT on business use. (A tribunal has challenged this and HMRC is appealing, so treat 20% as the live position.)
• Home charging is at the 5% domestic rate. A sole trader can reclaim the business proportion, but an employer cannot reclaim VAT on an employee charging a company car at home, because the electricity is supplied to the individual, not the business. This is the most common mistake.
• Buying a car (EV included): VAT is generally blocked unless the car has genuinely no private use available. Leasing: 50% of the VAT is recoverable. Vans: up to 100% on business use.

EVs now pay road tax

From 1 April 2025, electric and zero-emission cars lost their Vehicle Excise Duty exemption. They were free; they are not any more.

• A new EV pays a £10 first-year rate, then the £200 standard rate from year two. Older EVs moved onto the standard rate too.
• EVs with a list price over £50,000 also pay the Expensive Car Supplement (around £425 a year) in years two to six. The threshold for zero-emission cars was raised from £40,000 to £50,000, applied retrospectively, so most EVs registered from April 2025 escape it.

Help with a charge point

The old grant for buying an EV ended years ago. The grants that survive are about chargers, and most run to 31 March 2027.

• Workplace Charging Scheme: up to £500 per socket (max 40) for businesses, charities and public bodies.
• Flats and rented homes, and on-street parking: £500 per socket for people who rent or own a flat, or have no off-street parking.
• Residential landlords: £500 per socket, up to 200 sockets.

This page is general information based on HMRC and gov.uk guidance current in June 2026, not personal tax advice. Rates and thresholds change, the choice between mileage and actual costs is locked per vehicle, and the right answer depends on your figures. If a meaningful amount of tax is at stake, confirm with an accountant or HMRC before you decide. Always check the current-year figures on gov.uk for the exact amounts.

Common questions

Do electric cars get a lower mileage rate than petrol cars?

No. HMRC's Approved Mileage Allowance Payment (AMAP) rate is the same whatever the fuel type. For a car or van you claim 55p per business mile for the first 10,000 miles in the 2026-27 tax year (45p up to 5 April 2026), then 25p per mile after that. An electric car is treated exactly the same as petrol or diesel for simplified mileage.

If I claim the mileage rate, can I also claim my charging cost?

No. The mileage rate already covers the running cost of the car, and for an EV that includes the electricity you use to charge it, plus insurance, servicing, depreciation and road tax. You cannot claim home or public charging on top of the mileage rate. You can still claim genuinely separate, business-only costs such as tolls, congestion or Clean Air Zone charges, and parking.

Can I claim the full cost of a new electric car against my tax?

If you are self-employed and use the actual-costs method (not the mileage rate), a brand-new, unused electric car can qualify for a 100% first-year allowance, letting you deduct the full purchase price in year one, restricted to your business-use percentage. This is currently available for expenditure up to 5 April 2027 for income tax. Second-hand EVs and hybrids do not qualify for the 100% allowance. Once you claim a capital allowance on a car you can no longer use the mileage rate for it, and a balancing charge usually applies when you sell, so it is worth modelling both methods first.

What is the Advisory Electricity Rate?

The Advisory Electricity Rate (AER) is the per-mile rate HMRC sets for reimbursing electricity used in a company electric car. As of June 2026 it is 7p per mile for home charging and 15p per mile for public charging, and it is reviewed quarterly. It applies to company cars only. If you use your own EV for work, you use the higher AMAP rate (45p/25p) instead, because that covers the whole cost of the car, not just the electricity.

Why is an electric company car so tax-efficient?

Company cars are taxed as a benefit in kind based on the car's list price and a percentage set by its CO2 emissions. A zero-emission car gets the lowest band: 3% in 2025-26, 4% in 2026-27 and 5% in 2027-28, compared with 25% to 37% for many petrol and diesel cars. That makes the taxable benefit, and the tax you pay, a fraction of an equivalent combustion car. It is the single biggest EV tax break, and the reason salary-sacrifice EV schemes are so popular.

Do electric cars pay road tax now?

Yes. From 1 April 2025 electric and zero-emission cars stopped being exempt from Vehicle Excise Duty. A new EV pays a £10 first-year rate, then the £200 standard rate from year two. EVs with a list price over £50,000 also pay the Expensive Car Supplement (around £425 a year) in years two to six. This is a recent change that catches a lot of people out.

Is this tax advice?

No. This is general information to help you understand the reliefs that exist, based on HMRC and gov.uk guidance current in June 2026. The right method and the amounts depend on your own figures, and the choice between mileage and actual costs is locked per vehicle, so if real money is at stake it is worth confirming with an accountant or HMRC before you commit.