Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will amend the HMRC £4000 upper threshold cap on travel costs in response to recent increases to the cost of travel.

Approved Mileage Allowance Payments (AMAPs) are used by employers to reimburse an employee’s expenses for business mileage in their private vehicle.

The current rates allow employees to claim up to 45p/mile for the first 10,000 miles and 25p/mile for each subsequent mile, tax free. An additional 5 pence per mile may also be claimed for every passenger transported.

The government sets AMAPs to minimise administrative burdens. AMAPs aim to reflect running costs including fuel, servicing and depreciation. Depreciation is estimated to constitute the most significant proportion of the AMAPs.

Employers are not required to use the AMAPs. 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.