EIM31365 - Employees using own vehicles for work: examples: items which are not mileage allowance payments
Section 229 ITEPA 2003
This page illustrates the calculation of chargeable mileage
allowance payments and mileage allowance relief (
EIM31235) when not all payments for
business travel (
EIM31260) in the employee’s own
vehicle are mileage allowance payments (MAPs,
EIM31210).
It also shows how to deal with the non-MAPs.
EXAMPLE
An employer wishes to encourage staff to give up their company cars, so offers a package comprising the following items to employee E, who will incur standing costs of £300 per month. E’s mileage estimates for 2003/04, sufficiently accurate for EIM31210, are 20,000 business and 5,000 private miles in the first year. In the event, E does 19,000 business miles.
- a guaranteed payment of £275 per month, agreed to comprise
- business proportion of standing costs, £300 x 20,000/25,000 = £240/month
- balancing amount to meet guarantee, £35/month
- an additional payment of 16p per business mile, in arrears when mileage is reported
- servicing (contracted for by employee but paid for by the employer, actual cost £150)
- insurance via the employer’s fleet policy at a cost to the employer of £450 per year
Step 1: find the amount of mileage allowance payments (MAPs) received:
| MAPs received | 12 x £240 + 19,000 x £0.16 | £5,920 |
None of the other items are mileage allowance payments: see below for their treatment.
Step 2: deduct the approved (exempt) amount (see EIM31230):
| approved amount | 10,000 x 40p = | £4,000 | |
| 9,000 x 25p = | £2,250 | £6,250 |
Step 3: is the answer positive or negative?
The answer is negative:
| Mileage Allowance Relief available ( EIM31330) | relief | £ 330 |
| AMAPs | exempt |
Treatment of non-mileage allowance payments
- balancing payment, £35/month = £420: add to earnings and subject to PAYE
- servicing: payment of employee’s pecuniary liability, report £150 on P11D
- insurance: benefit in kind of £450, report on P11D
E is entitled to a deduction of £330 from their earnings, but the employer is not entitled to reduce either the £420 earnings or £600 reportable on P11D by this amount.
