ICAEW.com works better with JavaScript enabled.

TAX NEWS

Employers cannot reimburse more than approved amount for business travel

Article

Published: 13 Sep 2022 Update History

Government corrects previous statements on the amount that employers can reimburse in relation to business mileage for the use of the employee’s own car free of income tax and national insurance contributions (NIC).

Approved mileage allowance payments (AMAPs) provide a statutory exemption from tax for payments to employees who carry out business travel in their own cars, vans, motorcycles or cycles.

The government has issued a written ministerial statement to correct its responses to a number of Parliamentary Questions, correspondence and a Parliamentary e-petition on the subject of AMAPs from March to August 2022. Many of these asked the government to increase the pence per mile figure to reflect higher fuel costs.

The government has identified that it misstated the position when it said that employers could reimburse actual amounts incurred (income tax and NIC free), providing they could show evidence of these costs. This is technically inaccurate: the exemption only applies if the payments do not exceed the approved amount for the vehicle.

HMRC’s online guidance has remained consistent: that employers cannot pay above the 45p per mile amount for a car.

In the event that employers have reimbursed employees more than the approved amounts and need further guidance, please contact Peter.Bickley@icaew.com

Read more:

Written ministerial statement Written statements - Written questions, answers and statements - UK Parliament
HMRC guidance Expenses and benefits: business travel mileage for employees' own vehicles: Overview

ICAEW Know-How from the Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty
The future of tax after COVID

As digital technologies transform society, the UK government is grappling with balancing the books while ensuring its tax system is fit for purpose. Join us as we take a look at the issues and challenges facing the tax system.

Read more

More from the Tax Faculty

Latest news
Making tax digital image
TAXwire

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly enewsletter

Practical guidance
Cover
TAXline

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image
Webinars

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.