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Business mileage in a private car: reimbursement rates

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:

Up to 10,000 miles: 45p 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, known as Mileage Allowance Relief on the difference.

There is also a 5p per passenger per business mile allowance for carrying fellow employees in a car or van on work journeys, however there is no relief payment on this if your employer decides to pay you less than this.

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

Last updated: March 2014.

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Lee Sibbald

Filed under: Company Car Tax

6 comments

C.D.Johnson

Because of the swift and major increases in fuel prices and vehicle registration charges etc in 2008, upward adjustments by HMG to tax allowances are now overdue.

No doubt representations have been made to HMG about the need to review UPWARDS the tax allowances (40p & 20p) payable to car owners for business maleage in private vehicles/cars.

Have you any information on this ?
Regards

Rebecca Long

What is the answer to the question above?
Are the rates going up or not?

Thank you for your help.

Sailesh Halai

Any news on the above?
Are the rates going up?

Thank you.

Faye Sunderland

The AMAP rates did not change this year (2008) but it is expected they will be reviewed in the Pre-Budget Report 2009.

kerry mossman

What should I be getting off my employer for per mile? I have only just started and they say 20p per mile, the car is essential for the role but does 20p cover the cost of fuel??

Bill Chubb

Your employer can pay you whatever you negotiate. It may be less than £0.40 but it could be more. I know of some instances where the employer pays £0.50 a mile for the first 10,000. The difference is that the beneficiary will only get tax-exemption on £0.40.

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