EIM31360 - Employees using own vehicles for work: examples: mileage allowance payments: monthly lump sum plus lower mileage rate
Section 230 ITEPA 2003
This page illustrates the calculation of chargeable mileage allowance payments and mileage allowance relief (EIM31235) where an employee receives a fixed monthly lump sum and a (normally) lower rate per mile for business travel (EIM31260) in their own vehicle.
All payments must be mileage allowance payments (MAPs, see EIM31210), which means that the lump sum element must be calculated so as to cover only the business proportion of the standing costs of the car. It must not be a payment made merely because the employee no longer has a company car; that is not a MAP.
EXAMPLE 1: For 2002-03 to 2010-11
Employee F uses their own car for business travel. F covers 8,000 miles of business travel in it in the tax year 2003/04. F’s employer pays employees who regularly use their own cars for business travel a monthly lump sum plus a lower mileage rate. F is paid £70 per month (based on the employer's calculations of the typical business proportion of the standing costs of owning and using the car) plus 30p per mile of business travel.
Step 1: find the amount of mileage allowance payments (MAPs) received:
| MAPs received | 12 months @ £70 | £ 840 | |
| 8,000 x 30p | £2,400 | £3,240 |
Step 2: deduct the approved (exempt) amount (see EIM31230):
| approved amount | 8,000 x 40p = | £3,200 |
Step 3: is the answer positive or negative?
The answer is positive:
| Excess over AMAPs | taxable, report on P11D | £ 40 |
| AMAPs | exempt | £3,200 |
EXAMPLE 2: For 2011-12 onwards
Employee G uses their own car for business travel. G covers 8,000 miles of business travel in it in the tax year 2011-12. G’s employer pays employees who regularly use their own cars for business travel a monthly lump sum plus a lower mileage rate. G is paid £70 per month (based on the employer’s calculations of the typical business proportion of the standing costs of owning and using the car) plus 35p per mile of business travel
Step 1: find the amount of mileage allowance payments (MAPs) received:
| MAPs received | 12 months @ £70 | £840 | |
| 8,000 x 35p | £2,800 | £3,640 |
Step 2: deduct the approved (exempt) amount (see EIM31230)
| Approved amount | 8,000 x 45p | £3,600 |
Step 3: is the answer positive or negative?
The answer is positive
| Excess over AMAPs | Taxable, report on P11D | £ 40 |
| AMAPs | Exempt | £3,600 |
