Business mileage in a private car: reimbursement rates in 2010/11

Many companies reimburse employees who use their own car for company business, usually this is done using an approved business mileage rate.

Alternatively, if you are self-employed and use your private car for the occasional business trip, again your business motoring costs can be covered by the Approved Mileage Allowance Payments known as AMAPs.

Using AMAPs you may reimburse an employee up to the amount shown below and the employee will not be liable for tax on it.

The current statutory mileage AMAP rates are:

Up to 10,000 miles: 40p per mile
10,000 miles or more: 25p per mile

The statutory mileage AMAP rates are the same for all cars, irrespective of engine size. For smaller cars, they are quite generous. But they may not cover the costs for larger cars.

The government wants to encourage drivers into more fuel-efficient cars – and reduce the UK’s carbon dioxide (CO2) emissions.

The mileage rates are higher for the first 10,000 miles per year to reflect standing annual costs of motoring, such as road tax, insurance and depreciation. For every subsequent mile, the rate is lower. This is also to discourage unnecessary business mileage, which is another part of the government’s drive to reduce CO2 emissions.

If you pay an employee a lower mileage rate than those in the AMAP table above, the employee can claim tax relief on the difference.

AMAPs can also be paid for using a motorbike on business (24p per mile) and cycling on business (20p per mile).