Car Allowances

Treasury written question – answered on 5th September 2022.

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Photo of Alan Mak Alan Mak The Exchequer Secretary

The Government sets the Approved Mileage Allowance Payment (AMAP) rates to minimise administrative burdens.

The current AMAP rates allow employees to claim up to 45 pence per mile for the first 10,000 miles and 25 pence for each subsequent mile, tax free if they use their private car or van for business purposes. An additional 5 pence per mile may also be claimed for every passenger transported.

AMAPs are intended to create administrative simplicity and certainty by using an average rate, which reflects vehicle running costs including fuel, depreciation, servicing, insurance, and Vehicle Excise Duty. As it is an average, the rate is necessarily more appropriate for some drivers than others.

Employers are not required to use the AMAP rates. Instead, they can agree to reimburse a different amount that better reflects their employees’ circumstances. If an employee is paid less than the AMAP rate, they can claim Mileage Allowance Relief (MAR) on the shortfall. However, where payments exceed the relevant AMAP rate, there will be an Income Tax and National Insurance charge on the difference.

The Government keeps the AMAP rates, like all taxes and allowances, under review and any changes are considered by the Chancellor.

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