SE34004 - Travelling expenses: employees working abroad - use of employees' own vehicles from 2002/03 onwards

Section 197AD and 197AF and Schedule 12AA ICTA 1988 as introduced by Section 57 and Schedule 12 FA 2001

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 from 2002/03. The actual cost of such travel is no longer deductible under Section 198(1) ICTA 1988 after 5 April 2002. However, employees may be entitled to a deduction for mileage allowance relief (MAR) for travel that would have qualified for tax relief under the Section 198 rules (see SE31800 onwards). This may be the case whether or not they receive AMAPs. See SE31205 for an overview of the new system.

Where a deduction is not due under the general rule in Section 198(1), relief may still be available under the special rules in Section 193 or Section 194 ( SE34002). The definition of "business travel" in the AMAPs and MAR legislation also applies to journeys covered by Sections 193 and 194. The effect of this is that where MAR is available in respect of the use of a vehicle -

• no deduction may be made under either Section 193 or Section 194 but
• the travel will be eligible for MAR if, in the absence of MAR, a deduction would have been available for it.

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 193(2)-(3) - see SE34020
• Section 193(5)-(6) - see SE34080
• Section 194(1)-(5)-(6) - see SE34025

Section 194(1)-(3)-(4) - see SE34040 Section 194(2) provides relief for the travelling expenses of an employee's family where certain conditions are satisfied ( SE34050). The legislation providing for the exemption for AMAPs and MAR requires an employee to use a qualifying vehicle for business travel. Therefore, the exemption for AMAPs and 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 - Section 197AE(2).