Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will publish the (a) formula and (b) sources of data used to calculate motoring costs.

Approved Mileage Allowance Payments (AMAPs) are used by employers to reimburse an employee’s expenses for business mileage in their private vehicle. The government sets the AMAP rates to minimise administrative burdens.

The AMAP rates aim to reflect running costs including fuel, servicing and depreciation. Depreciation is estimated to constitute the most significant proportion of the AMAP rates.

There is no formula or calculation which delivers the AMAPs rates for cars of 45 pence per mile for the first 10,000 miles and 25 pence per mile thereafter. The decision on what rates to adopt is a policy decision taken by the Chancellor after considering a range of factors. These factors include:

• the costs of motoring per business mile for a range of cars and mileages;

• the transport needs of business;

• the cost to the Exchequer of changing the rate;

• the overall fiscal position.”

Employers are not required to use the AMAPs rates. Instead, they can agree to reimburse a different amount that better reflects their employees’ circumstances. If an employee is paid less than the AMAP rate, they can claim Mileage Allowance Relief (MAR) on the shortfall. However, where payments exceed the relevant AMAP rate, there will be a tax and National Insurance charge on the difference.