Approved Mileage Rates

19th August 2008

Those that use their own cars on company business, will be familiar no doubt with the Inland Revenue’s Approved Mileage Allowance Payments (AMAPs). These are the amount per mile that you can reclaim from your employer without any tax or NI issues. Many of Insight Associates clients make use of this system.

AMAPs were introduced in the 2002/03 tax year and were set at 40p per mile for the first 10,000 business miles and 25p per mile thereafter (in any one tax year). AMAPs were meant to be a contribution towards the depreciation and running costs incurred by the employee in using the vehicle for work purposes (including the cost of petrol). This rate has not been revised at all since, despite very significant rises in fuel prices and the cost of motoring generally. However, over the same period there have been a number of upward increases in the approved fuel only mileage rates used by company car drivers who do not get all fuel costs paid by the employer.

The AA has calculated that the actual cost incurred by a driver of an average car (costing between £13,000 and £20,000) over 10,000 miles is something close to £6,500. This compares to the 10,000 x 40p = £4,000 that can be reclaimed. Therefore the driver will subsidise employment related travel by almost £2,500.

It is very clear that this whole area is in very urgent need of attention by the Government.

However, in the meanwhile there is a little known extra that can be claimed, that may go some way to plug part of the gap. This is the Approved Passenger Rate. This is an additional tax free 5p per mile that can be claimed when one or more employees are passengers in the vehicle and also travelling on business. The amount is fixed at one x 5p regardless of the number of passengers unfortunately! So make sure you keep a note of the journeys that you make when you have a fellow employee with you and claim the extra 5p. Thanks go to our good friend Nick Paterno of Vantis for letting us know about this one - thanks Nick!

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