Expenses and benefits: business travel mileage for employees' own vehicles
Rules for tax
If you make payments to employees above a certain amount, you鈥檒l have to report them to HM Revenue and Customs (HMRC) and deduct and pay tax.
Mileage Allowance Payments
Mileage Allowance Payments (MAPs) are what you pay your employee for using their own vehicle for business journeys.
You鈥檙e allowed to pay your employee a certain amount of MAPs each year without having to report them to HMRC. This is called an 鈥榓pproved amount鈥�.
You can also pay the approved amount of MAPs to your employee if they use their own car to do volunteer work related to coronavirus (COVID-19). You must report and pay tax through a PAYE Settlement Agreement as a COVID-19 related benefit.
Work out the value
To calculate the 鈥榓pproved amount鈥�, multiply your employee鈥檚 business travel miles for the year by the rate per mile for their vehicle.
Use HMRC鈥檚 MAPs working sheet if you need help.
Tax: rates per business mile
| First 10,000 miles | Above 10,000 miles | |
|---|---|---|
| Cars and vans | 45p (40p before 2011 to 2012) | 25p |
| Motorcycles | 24p | 24p |
| Bikes | 20p | 20p |
Example
Your employee travels 12,000 business miles in their car - the approved amount for the year would be 拢5,000 (10,000 x 45p plus 2,000 x 25p).
It does not matter if your employee uses more than one vehicle in a year - it鈥檚 all calculated together.
What to report and pay
Anything above the 鈥榓pproved amount鈥�
You must:
- report on form P11D
- add anything above the 鈥榓pproved amount鈥� to the employee鈥檚 pay, and deduct and pay tax as normal
Anything below the 鈥榓pproved amount鈥�
You will not have to report to HMRC or pay tax, but:
- your employee will be able to get tax relief (called Mileage Allowance Relief, or MAR) on the unused balance of the approved amount
- you can make separate optional reports to HMRC of any such unused balances under a scheme called the Mileage Allowance Relief Optional Reporting Scheme (MARORS) - contact HMRC to join the scheme