SE35004 - Travelling expenses - employees working but not domiciled in the United Kingdom - 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
Non domiciled employees who work in the UK 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), non domiciled employees may still obtain relief
under the special rules in Section 195 (
SE35002)
Section 195 provides for a deduction for the cost of an
employee's journeys between the country where the employee normally
lives and the UK.
SE35050 sets out the conditions that have
to be satisfied. The definition of "business travel" in the AMAPs
and MAR legislation also applies to journeys covered by Section
195. The effect of this is that where MAR is available in respect
of the use of a vehicle -
- no deduction may be made under Section 195 but
- the travel will be eligible for MAR if, in the absence of MAR, a deduction would have been available for it.
It follows that AMAPs will be exempt and MAR may be due for
employees who use their own vehicles for travelling between the
country where they normally live and the UK provided that all the
other conditions for relief under Section 195 have been satisfied.
Section 195 also provides relief for the travelling expenses
of an employee's family where certain conditions are satisfied (
SE35050). The legislation providing for
the exemption for AMAPs and for MAR requires an employee to use a
qualifying vehicle for business travel. Therefore, the exemption
for AMAPs and MAR may be available when the family accompanies the
employee but not when the family travels alone. The additional
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).
