Expenses and benefits: business travel mileage for employees' own vehicles

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Rules for tax

If you make payments to employees above a certain amount, you’ll 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’re allowed to pay your employee a certain amount of MAPs each year without having to report them to HMRC. This is called an ‘approved amount’.

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 ‘approved amount’, multiply your employee’s business travel miles for the year by the rate per mile for their vehicle.

Use HMRC’s 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

Your employee travels 12,000 business miles in their car - the approved amount for the year would be £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’s all calculated together.

What to report and pay

Anything above the ‘approved amount’

You must:

  • report on form P11D
  • add anything above the ‘approved amount’ to the employee’s pay, and deduct and pay tax as normal

Anything below the ‘approved amount’

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