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 levels of Approved Mileage Allowance Payments at more regular intervals in light of recent increases to fuel prices.

The Government sets the Approved Mileage Allowance Payments (AMAPs) rates 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. Fuel costs only contribute to a fraction of AMAP rates and not the total rate.

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 is higher or lower than AMAPs. If an employee is paid less than the approved amount, they are allowed to claim Mileage Allowance Relief (MAR) from HMRC. 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.

As with all taxes and allowances, the Government keeps AMAP rates under review and any changes are considered by the Chancellor.