Expenses and benefits: business travel mileage for employees' own vehicles
Rules for National Insurance
You might have to deduct and pay National Insurance on payments relating to relevant motoring expenditure (RME), which includes:
- Mileage Allowance Payments (MAPs)
- payments that would be MAPs, but are paid to a person other than your employee, for your employee鈥檚 benefit
- any other cash payments you make to your employee towards the use of their vehicle
A certain amount of RME will be exempt from reporting to HM Revenue and Customs (HMRC) or paying National Insurance on. This is called the 鈥榪ualifying amount鈥�.
Work out the value
To calculate out the 鈥榪ualifying amount鈥�, multiply your employee鈥檚 in the earning period by the rate per mile, shown in the table below.
National Insurance: rates per business mile
| Type of vehicle | Every business mile |
|---|---|
| Cars and vans | 45p |
| Motorcycles | 24p |
| Bikes | 20p |
Example
Your employee drives 1000 miles in their van, and you make a payment of RME to cover this. The qualifying amount for the earnings period would be 拢450 (1,000 x 45p).
What to report and pay
If the RME you provide to your employee in the earnings period exceeds the qualifying amount:
- add the excess to their other earnings for that earnings period when calculating Class 1 National Insurance (but not Pay As You Earn (PAYE) tax) through payroll
If the RME is below the qualifying amount, you have:
- nothing to report
- no National Insurance to pay
There鈥檚 no Mileage Allowance Relief for National Insurance, and you cannot carry forward the difference between RME and the qualifying amount to a later earnings period.