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					Approved Mileage Allowance Payments
Who is likely to be affected?
Employees who use their own cars or vans for business mileage, and employers who pay
mileage allowances for such use. Approved Mileage Allowance Payments (AMAPs) rates
are also used by employees and they will benefit from the extension of passenger payments
to volunteers.

General description of the measure
The AMAPs rates can be used to claim the cost of business mileage in an employee’s own
vehicle. The rates cover cars, vans, motorcycles and bicycles. Where an employer pays
less than the published rates, employees can make a claim for tax relief for the shortfall by
using Mileage Allowance Relief (MAR).
Regulations will be introduced so that, with effect from 6 April 2011, the rate of AMAPs for
cars and vans will be increased from 40p per mile to 45p per mile for the first 10,000 miles of
business travel in the tax year. The rate for mileage beyond 10,000 miles will remain at 25p
per mile.
This will mean drivers receiving mileage allowances in excess of AMAPs will see a reduction
in their tax and national insurance contributions (NICs) liability, while those who receive less
will be entitled to a larger amount of MAR.
In addition to claiming AMAPs rates, an allowance for passenger payments currently in place
for employees at 5p per passenger per mile will be extended to volunteers. That will not
require legislation and will be covered in updated HMRC guidance.

Policy objective
The objective of AMAPs is to support the transport needs of business. This measure
provides tax relief for payments to employees using their own cars or vans for business use;
NICs relief will follow the tax treatment.

Background to the measure
•   This measure is announced at Budget 2011.
•   There has been no consultation on this measure.

Detailed proposal
Operative date
The new rate and the extension of passenger payments to volunteers will apply on and after
6 April 2011.

Current law
Sections 229 to 230 of the Income Tax (Earnings and Pensions) Act 2003 provide for the
approved mileage allowance payments for vehicles, and sections 233 to 234 provide for
passenger payments. The rate for cars and vans provides the level at which employees
using their own vehicles for business mileage can be reimbursed for that use by employers
with no chargeable income arising as a result.



Tax Information and Impact Note                                                     23 March 2011
Proposed revisions
Regulations will be laid on 23 March 2011 to increase the rate of AMAPs for cars and vans
to 45p per mile for the first 10,000 miles of business travel in the tax year.

Summary of impacts
Exchequer              2011-12        2012-13       2013-14         2014-15       2015-16
impact (£m)            -35            -35           -35             -35           -35
Economic               This measure is not expected to have significant economic impacts.
impact
Impact on              This measure increases the rate of the car and van allowance for the first
individuals            10,000 miles of business travel in a tax year. Those drivers receiving
and                    mileage allowances in excess of AMAPs will see a reduction in their tax
households             and NICs liability, while those who receive less will be entitled to a larger
                       amount of Mileage Allowance Relief (MAR). Where employers choose to
                       match AMAPs increases, gains for employees will peak at £500 per year
                       for claims of 10,000 miles and above.
                       Volunteers carrying passengers as part of their volunteering duties will
                       also be allowed to use the passenger payments allowance of 5p per mile
                       per passenger. This allowance already exists for employees.
Equalities             The change is a relieving provision which applies equally to all employees
impacts                who use their own car or van for business mileage.
Impact on              This measure creates no ongoing administrative burden for businesses as
business               they are required to do no more than they do at present.
including third
                       There may be a small one-off compliance cost for businesses to adjust to
sector
                       the new rate if they have automated systems for the payment of
                       expenses, the cost of which is estimated to be negligible.
                       Businesses and third sector organisations can choose whether or not to
                       reflect AMAPs changes in rates.
Operational            HM Revenue and Customs’ (HMRC) costs and impacts will be negligible
impact (£m)            as the increase will only require some minor changes to internal and
(HMRC or               external guidance.
other)
Other impacts          Small firms with 20 or fewer employees may be affected by this measure.
                       HMRC regularly speaks to industry groups that include representatives of
                       small business. There is no indication that they would have any difficulty
                       in implementing the change, which will simply need a substitution of the
                       monetary value in claims made by employees.
                       In addition, it is a matter for employers how much they pay their
                       employees for the business use of a private car or van. They may choose
                       not to meet the statutory increase, in which case employees can seek tax
                       relief on the amount up to the AMAPs limit through the use of MAR.

Monitoring and evaluation
The policy will be monitored through information collected from tax returns and other data
sources.




Tax Information and Impact Note                                                         23 March 2011
Further advice
If you have any questions about this change, please contact Steve Gentle on 020 7147 2482
(email: steven.m.gentle@hmrc.gsi.gov.uk).




Tax Information and Impact Note                                               23 March 2011

				
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