Car Allowances

(asked on 21st March 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of reviewing the rates of tax relief on vehicle mileage for work vehicles.


Answered by
Helen Whately Portrait
Helen Whately
Minister of State (Department of Health and Social Care)
This question was answered on 28th March 2022

The Government sets the Approved Mileage Allowance Payments (AMAPs) rates to minimise administrative burdens. AMAP rates aim to reflect running costs including fuel, servicing and depreciation. Depreciation is estimated to constitute the most significant proportion of the AMAP rate.

Employers are not required to use the AMAPs rates. 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.

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