SE31215 - Employees using their own vehicles for work: rules from 2002/03 onwards - definitions - approved amount for mileage allowance payments

Section 197AD(1) and (3) and Paragraph 4 Schedule 12AA ICTA 1988 as introduced by Section 57 and Schedule 12 FA 2001

As explained in the overview at SE31205, from 6 April 2002 there is an exemption from tax for approved mileage allowance payments (AMAPs).

Only MAPs can be exempt from tax under the AMAPs legislation. There are therefore two stages in deciding whether a payment is exempt under the AMAPs scheme.

• First: is the payment a "mileage allowance payment" (MAP) - see SE31210.
• Second: is the payment within the "approved amount for mileage allowance payments applicable to that kind of vehicle" (the AMAPs amount, see this page and SE31255).

The concept of "the approved amount for mileage allowance payments" applicable to a particular kind of vehicle is important for working out both

• the extent to which MAPs are exempt from tax as approved mileage allowance payments (AMAPs) (see SE31255), and
• how much mileage allowance relief (MAR) the employee is entitled to (see SE31340).

The same definition applies for both AMAPs and MAR purposes. It is contained in paragraph 4(1) Schedule 12AA ICTA 1988.

The approved amount for mileage allowance payments (the AMAPs amount) applicable for a kind of vehicle is -

M x R

where

• M is the number of miles of business travel by the employee (other than as a passenger), using that kind of vehicle, in the tax year in question
• R is the mileage rate applicable for that kind of vehicle. (See SE31240 onwards for details of the mileage rates).

The meaning of "business travel" is the same as for Schedule E deductions purposes (see SE31225).

The guidance at SE31255 and at SE31340 (see above) and related examples show how the M x R calculation is applied in practice.

Note that the approved amount is defined by reference to a particular kind of vehicle, and not to a specific vehicle (see SE31230). So if an employee uses two or more cars during the tax year (whether owned simultaneously or consecutively), the AMAPs amount will be calculated as if the two or more cars were one. See example SE31305.

On the other hand, if the employee uses both a car and a bicycle for business travel, the AMAPs amount will be calculated separately for each vehicle as these are treated as separate kinds of vehicle by the legislation, with different mileage rates applicable. See example SE31305.