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Car Allowances

Question for Treasury

UIN 5429, tabled on 19 May 2022

To ask the Chancellor of the Exchequer, whether his Department has plans to increase the business mileage rate for motorists.

Answered on

27 May 2022

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.

Answered by

Treasury