Driving one’s own car rather than using the one provided by an employer for business purposes might be an expensive choice. Every work trip requires payment for petrol, and it also brings the next scheduled maintenance appointment a few miles closer. There is also the issue of the tyres, wipers, clutch, and other components becoming worn down over time, in addition to the costs of insurance and depreciation.

Mileage Allowance Payments, or MAPs, are the payments that an employer makes to an employee in exchange for the employee’s use of their own vehicle for business-related travel. It is acceptable for employers to give employees a predetermined maximum amount of MAPs each year without being required to disclose the payments to HMRC. This is what is referred to as an “approved amount.” To get the “approved amount,” multiply the total number of miles driven for business by each employee during the year by the rate per mile that applies to their vehicle. On the portion of the permitted amount that is not spent, employees are eligible to get tax relief, which is referred to as Mileage Allowance Relief, or MAR. Under a programme known as the Mileage Allowance Relief Optional Reporting Scheme, employers are given the opportunity to submit separate optional reports to HMRC concerning any such unused amounts (MARORS).

The Mileage Allowance Payment (MAP) rates are published by HMRC and represent the maximum amount that employees can be paid for business-related driving expenses without being subject to any form of tax. The rates are also different based on how far a car has been driven over the course of the tax year, with a more favourable rate for the first 10,000 miles travelled throughout the year. Up to this mileage, drivers are eligible to receive 45 pence for every mile driven. After ten thousand miles, the charge lowers to 25 pence for each mile driven. Therefore, a motorist who travels 12,000 miles in a single year is eligible for a £5,000 reimbursement (10,000 x 45p, plus 2000 x 25p). There are separate rates for different types of vehicles, including cars and vans, motorcycles, and bicycles.

If you need help with employment tax compliance, please call our accountants for advice.