Employees' mileage payments

As you may be aware there is a statutory system of tax and NIC free mileage rates for business journeys in an employee’s own vehicle issued by HMRC. These mileage payments are known as ‘Authorised Mileage Allowance Payments’ (AMAP).

The statutory rates for the current tax year are:

	Rate per mile
Up to 10,000 miles	40p
Over 10,000 miles	25p

Employers can pay up to the statutory amount without generating a tax or NIC charge. Where employers pay less than the statutory rate (or make no payment at all) employees can claim tax relief on the difference between any payment received and the statutory rate.

In view of the increases in costs of running a vehicle since the last review in 2002, the Chartered Institute of Taxation (CIOT) has asked the government to look again at the level of AMAP.

The AMAP rates are designed to cover the full cost of the business travel, which includes fuel, depreciation of the vehicle, servicing and insurance costs. As fuel is clearly a major part of the costs and with the significant increases in fuel prices recently the rates should perhaps be reconsidered.

As the HMRC has updated the Advisory Fuel Rates (AFR) for employees driving employer provided cars with effect from 1 June 2008, it is hoped that consideration will be given to the AMAP rates as well.