To ask the Chancellor of the Exchequer, what assessment his Department has made of the adequacy of the business mileage allowance in the context of rising fuel and living costs.

The Government sets Approved Mileage Allowance Payments (AMAPs) to minimise administrative burdens. AMAPs aim to reflect running costs including fuel, servicing and depreciation. Depreciation is estimated to constitute the most significant proportion of the AMAPs.

Employers are not required to use the AMAPs. Instead, they can agree to reimburse the actual cost incurred, where individuals can provide evidence of the expenditure, without an Income Tax or National Insurance charge arising.

Alternatively, they can choose to pay a different mileage rate that better reflects their employees’ circumstances. However, if the payment exceeds the amount due under AMAPs, and this results in a profit for the individual, they will be liable to pay Income Tax and National Insurance contributions on the difference.

The Government keeps this policy under review.