SE31290 - Employees using their own vehicles for work: rules from 2002/03 onwards - calculation of approved mileage allowance payment - pence per mile mileage rate paid by employer - less than 10,000 business miles: examples
Paragraph 4 Schedule 12AA ICTA 1988 as introduced by Schedule 12 FA 2001
These examples illustrate the rules for calculating the approved amount for mileage allowance payments (the AMAPs amount) described at SE31250 onwards.
See SE31225 for what counts as "business travel."
EXAMPLE 1
Employee uses his own car for business travel. In the tax year 2002/03 he covers 5,000 miles of business travel in it. His employer pays him 44p for each business mile.
Step 1
| Mileage allowance payments (MAPs) received | 5,000 x 44p | £2,200 |
Step 2
For 2002/03 the statutory mileage rates for a car are 40p for the first 10,000 miles of business travel and 25p for each additional mile (see SE31240).
| AMAPs amount (see SE31215) | 5,000 x 40p | £2,000 |
Step 3
Compare the figures from Steps 1 and 2.
- If Step 1 = Step 2: all payments are exempt as AMAPs
- If Step 1 > Step 2, the Step 2 amount is exempt as AMAPs but the excess is chargeable to tax
- If Step 1 < Step 2, all payments are exempt as AMAPs and Mileage Allowance Relief is available on the shortfall.
In this example, Step 1 is greater than Step 2. The mileage allowance payments of £2,200 paid by the employer are split as follows:
| AMAPs | exempt | £2,000 |
| Excess over AMAPs | taxable | £200 |
Conclusion: employer must report £200 taxable on form P11D or P9D.
EXAMPLE 2
Employee uses her own car for business travel. In the tax year 2002/03 she covers 7,000 miles of business travel in it. Her employer pays her 35p for each business mile.
Step 1
| Mileage allowance payments (MAPs) received | 7,000 x 35p | £2,450 |
Step 2
For 2002/03 the statutory mileage rates for a car are 40p for the first 10,000 miles of business travel and 25p for each additional mile (see SE31240).
| AMAPs amount (see SE31215) | 7,000 x 40p | £2,800 |
Step 3
Carry out the same comparison as at Step 3 of Example 1.
In this example, Step 1 is less than Step 2. All the mileage allowance payments of £2,450 paid by the employer are therefore exempt from tax as AMAPs. The employer does not need to make any report to HMRC of the payments made. (See SE31275 for details of employer reporting, and an explanation of why no dispensation is needed).
Conclusion: the employee is entitled to mileage allowance relief of £350 (see SE31330 onwards).
