Employees who work abroad may use their own vehicles for
business travel. Approved mileage allowance payments (AMAPs) paid
to employees in respect of business travel in their own vehicles
are exempt from tax. The
actual cost of such travel is not deductible
(Section 359 ITEPA 2003). However, employees may be entitled to a
deduction for mileage allowance relief (MAR) for travel that would
have qualified for tax relief as business travel (see
EIM31800 onwards). This may be the case
whether or not they receive AMAPs. See
EIM31205 for an overview of the system.
The AMAPs and MAR legislation links the meaning of business travel directly to the rules for deductions under Sections 337 to 342 ITEPA 2003. This link should be taken to mean that business travel also includes journeys that qualify for tax relief under the special rules for employees travelling to work outside the United Kingdom. The effect of this is that where MAR is available in respect of the use of a vehicle:
AMAPs will be exempt and a deduction for MAR may be available for employees who use their own vehicles for travelling to and from the UK and who satisfy the conditions for relief under:
Section 371 provides relief for the travelling expenses of an employee's family where certain conditions are satisfied (see EIM34050). The legislation providing for the exemption for AMAPs and the deduction for MAR requires an employee to use a qualifying vehicle for business travel. Therefore, the exemption for AMAPs and the deduction for MAR may be available when family members accompany the employee but not when the family travels without the employee. The exemption for passenger payments is unlikely to be available for family members who accompany the employee. This is because qualifying passengers have also to be employees for whom the travel is business travel.