Car Allowances

Treasury written question – answered on 20th June 2022.

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Photo of Peter Gibson Peter Gibson Conservative, Darlington

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of varying the approved mileage reclaim rate of 45p per mile in light of increasing fuel costs.

Photo of Helen Whately Helen Whately The Exchequer Secretary

The Government sets the Approved Mileage Allowance Payments (AMAPs) rates 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.

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