A 55p mileage payment can be tax-efficient. It is not automatically the right price to put on a client invoice, nor does it tell you what your EV actually costs to run. That distinction is where many drivers lose money or create paperwork they cannot defend later.
When deciding how much to charge per mile, first establish what the charge is for. Are you asking an employer to reimburse business travel in your own car? Quoting a customer for travel? Or working out whether a fixed per-mile rate covers the real cost of using your EV? Each needs a different answer.
Start by separating the three per-mile figures
The most useful number is rarely a single universal rate. Keep three figures separate from the outset.
Your energy cost per mile is simply the electricity used to move the car. It changes with tariff, weather, speed, load, charging losses and where you plug in. A driver charging mostly at home overnight may see a very low figure. The same car on rapid charging for a motorway-heavy week can cost several times more per mile.
Your running cost per mile adds the costs that rise as you use the car: tyres, servicing, repairs, washes if they are genuinely business-related, and perhaps parking or road charges where these are not billed separately. This is the figure that stops a cheap home-charging rate becoming false reassurance.
Your total ownership cost per mile adds fixed and long-term costs, such as insurance, vehicle excise duty where applicable, finance interest, depreciation and annual servicing. It is the honest answer to what the car costs over time, but it is not always the right rate to pass on to an employer or customer.
A mileage reimbursement rate is different again. It is an agreed allowance, often shaped by tax rules and administrative convenience rather than the precise cost of your individual vehicle.
HMRC mileage rates are an allowance, not a price list
For employees using their own car for business journeys, HMRC’s Approved Mileage Allowance Payments rate is commonly 55p per mile for the first 10,000 business miles in a tax year and 25p per mile thereafter. These rates apply to electric cars as well as petrol and diesel cars.
If your employer pays within the approved amount and the conditions are met, the payment is generally free of Income Tax and National Insurance. That makes 55p a practical benchmark for employee claims. It is designed to cover more than electricity. It is intended to recognise the broad cost of providing and using a private vehicle for work.
But it does not mean every EV driver spends 55p per mile. Someone charging at 8p per kWh at home may spend only a few pence on energy for each mile. Someone relying on public rapid charging, replacing tyres early and covering high annual mileage may have a much higher real operating cost. HMRC’s rate is a standard allowance, not marketing figures and not a personalised cost calculation.
If you are self-employed, the same approved mileage rates can be used in some circumstances as a simplified way to calculate allowable vehicle expenses. Whether that is better than claiming actual costs depends on your business structure, VAT position, vehicle ownership and records. Once you use a simplified mileage method for a vehicle, there can be restrictions on switching methods, so take advice where the amounts matter.
How much to charge per mile when invoicing a client
A client travel rate is a commercial decision. It needs to cover the cost of making the journey and the time that journey prevents you from doing other paid work. HMRC’s 55p rate is a useful reference point, but it is not a compulsory client rate and it may be too low or too high for your work.
Start with your real vehicle cost per mile. For a fair baseline, use at least six to 12 months of records rather than one unusually cheap charging session. Include home charging, public charging, prepaid charging credit, maintenance, tyres, insurance and depreciation if you want the full ownership view.
Then decide which costs your travel price needs to recover. A mobile engineer, photographer or consultant may need to account for both vehicle use and unbillable travel time. A contractor whose day rate already covers travel may choose a lower mileage figure, or a fixed radius with a clear charge beyond it. A delivery business may need a rate that reflects repeated stopping, city parking and heavier tyre wear, not just motorway efficiency.
A workable calculation is:
Client mileage rate = real vehicle cost per mile + travel-time allowance + business overhead + profit margin
Do not add every element blindly. If you bill travel time separately, do not hide it again in an inflated mileage charge. If a customer pays parking, tolls or congestion charges at cost, keep those outside the per-mile figure. Clear invoices are easier to approve and easier to explain.
For example, imagine your total EV ownership cost is 31p per mile. You spend 40 minutes travelling to a job and back, and your normal hourly value suggests that time is worth £30. On a 20-mile round trip, adding all of that time value would produce a rate far above 55p per mile. That may be justified, but it may be clearer to invoice 31p or 55p per mile plus a separate travel-time line. The right presentation depends on the client agreement.
Calculate your real EV cost before choosing a rate
The energy part begins with a simple formula:
Energy cost per mile = total electricity cost ÷ miles driven
Use the amount actually paid, including VAT where you cannot reclaim it, rather than the headline tariff alone. A 30p per kWh home tariff is not necessarily 30p per kWh at the battery after charging losses. Likewise, a public charging receipt may include a connection fee, idle fee or a prepaid balance being drawn down. Record what left your bank account and what energy was received.
Mileage should cover the same period as the costs. Dividing one month’s charging spend by six months of miles creates a neat-looking but meaningless result. If you charge at home and on public networks, log both. If a household bill includes other electricity use, record the kWh supplied to the vehicle and the applicable tariff rather than guessing.
For a fuller rate, spread annual costs across annual mileage. If tyres cost £600 and last 30,000 miles, the tyre provision is 2p per mile. If insurance is £900 a year and you drive 12,000 miles, that is 7.5p per mile before any business-use adjustments. Depreciation needs the most care because it is a real cost but can move sharply with vehicle age, mileage and resale market conditions.
A logbook such as Amperlo is useful here because it can hold charging receipts, mileage, maintenance and prepaid energy balances in one record. The point is not to manufacture a flattering number. It is to see the number you can support when a client, accountant or business partner asks how it was calculated.
VAT and reimbursement need their own records
VAT is where a casual mileage spreadsheet often falls apart. A VAT-registered business may be able to recover VAT on the fuel or electricity element of a mileage payment, subject to the relevant conditions, evidence and rules. It cannot simply treat the whole 55p allowance as electricity and reclaim VAT on all of it.
For EV charging, retain VAT receipts from public charge points and maintain a credible record for home electricity. The treatment of electricity, reimbursement and input tax can vary with who owns the vehicle, who pays the energy bill and whether charging is for business use. Keep the energy element distinct from the wider mileage allowance, and ask an accountant for advice on your specific position.
This is also why a client invoice needs a different mindset from an employee mileage claim. The client is buying a service under your commercial terms. Your tax treatment, VAT registration and invoice wording should follow that arrangement, not a copied expense-claim template.
Avoid the rates that feel easy but cost you later
A flat 55p rate is often administratively tidy, but it can hide a loss on long trips where public charging and travel time are expensive. Charging only the electricity rate has the opposite problem: it ignores tyres, depreciation and the cost of tying up the vehicle. A rate based on a manufacturer’s consumption claim is weaker still, because real-world efficiency is affected by your routes, your charging pattern and your driving.
Review your numbers at least quarterly if you drive for work regularly, and after any major change such as a tariff switch, tyre replacement, insurance renewal or a move from home charging to public charging. Keep the rate stable for clients where possible, but review the evidence behind it.
The sensible rate is not the one that looks cheapest in a quote or most generous on an expense form. It is the one that matches the purpose of the payment, is clear before the journey starts, and is supported by a record of what your car actually costs to run.
