Mileage allowance payments

If you want to reimburse an employee for the costs of using their own car, then only the Approved Mileage Allowance Payments (AMAPs) can be used. This is because:

  • the legislation does not permit the payment of actual costs;
  • nor does it permit any bespoke agreement to be reached with HMRC.

What happens if you want to pay more?

Class 1 National Insurance contributions (NIC) will be due on any payment over 45p per mile.

Any payments above the AMAP’s rate will be reported on P11d for income tax purposes unless you are payrolling your benefits under RTI.

If you are paying your employees below the maximum AMAP limits, they can claim income tax relief under the mileage allowance relief rules.

So, reimburse employees at the approved rate. They will receive this tax free, but you still get the tax relief.

AMAPs can be paid tax free at 45p for the first 10,000 business miles and at 25p thereafter.

You can pay an extra 5p per passenger per business mile for carrying fellow employees in a car or van on journeys which are also work journeys for them.



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