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HMRC internal manual

Employment Income Manual

Employment income: travelling and subsistence payments: motor mileage allowances paid for business travel in an employee's own car

Sections 229 to 236 ITEPA 2003

Rather than reimburse employees for the precise amount of the expenses actually incurred for travelling on business, many employers pay a round sum mileage allowance, expressed as x pence per mile.

Mileage allowance payments which employers make to employees who use their own vehicle or cycle for business travel are not chargeable to tax if they do not exceed the appropriate approved mileage allowance payments (AMAPs) limit. Payments that exceed the AMAPs limit will be taxed to the extent that they exceed the limit. Additional tax free payments can be made to employees who carry business passengers.

Full guidance on the AMAPs scheme is at EIM31200 onwards.

Round sum allowances

Round sum allowances, as distinct from reimbursements of expenses actually incurred, are general earnings (see EIM00511) chargeable under Section 7(3) ITEPA 2003.