SE31330 - Employees using their own vehicles for work: rules for deductions from 2002/03 onwards – mileage allowance relief – outline

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

The guidance at SE31205 provides an overview of the rules that apply from 6 April 2002 for

• payments that employers make to employees who carry out business travel in their own cars, vans, motor cycles or cycles, and
• deductions to which employees are entitled for carrying out business travel in their own cars, vans, motor cycles or cycles.

The guidance on this page deals with the second of these.

From 6 April 2002 there is a compulsory system based on statutory mileage rates that must be used for working out the amount of any deductions that employees are entitled to for carrying out business travel in their own cars, vans, motor cycles or cycles. This new statutory deduction is called mileage allowance relief (MAR).

MAR replaces both

• the old statutory method for calculating relief (see SE31335 for details of the changes), and
• the optional system of using the Inland Revenue’s authorised mileage rates for cars, motor cycles and cycles.

If an employee uses his or her own vehicle for business travel, there are two circumstances in which mileage allowance relief (MAR) is due:

• The employee gets no mileage expenses payments for business travel in that vehicle, or
• The total amount of all the mileage expenses payments for the tax year for business travel in that vehicle is less than the “approved amount for mileage allowance payments applicable to that kind of vehicle” (the AMAPs amount, see SE31215).

In both cases the same statutory mileage rates used to calculate the AMAPs amount (see SE31250 onwards) are used to calculate the amount of any MAR that is due. The statutory mileage rates are shown at SE31240.

For a more detailed explanation of how to calculate the amount of MAR see SE31340.