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HMRC internal manual

Employment Income Manual

Travelling expenses: employees working but not domiciled in the United Kingdom: use of employees' own vehicles: mileage allowances and mileage allowance relief

Part 4 Chapter 2 ITEPA 2003

Non domiciled employees who work in the UK may use their own vehicles for business travel. Approved mileage allowance payments (AMAPs) paid to employees in respect of business travel in their own vehicles are exempt from tax. The actual cost of such travel is not deductible (Section 359 ITEPA 2003). However, employees may be entitled to a deduction for mileage allowance relief (MAR) for travel that would have qualified for tax relief as business travel (see EIM31800 onwards). This may be the case whether or not they receive AMAPs. See EIM31205 for an overview of the system.

The AMAPs and MAR legislation links the meaning of business travel directly to the rules for deductions under Sections 337 to 342 ITEPA. This link should be taken to mean that business travel also includes journeys that qualify for tax relief under the special rules for non domiciled employees working in the United Kingdom. The effect of this is that where MAR is available in respect of the use of a vehicle -

  • no deduction may be made under Sections 373 to 375 but
  • the travel will be eligible for MAR if, in the absence of MAR, a deduction would have been available for it.

It follows that AMAPs will be exempt and MAR may be due for employees who use their own vehicles for travelling between the country where they normally live and the UK provided that all the other conditions for relief under Section 373 have been satisfied (see EIM35010).

Section 374 provides relief for the travelling expenses of an employee’s family where certain conditions are satisfied (see EIM35050). The legislation providing for the exemption for AMAPs and for MAR requires an employee to use a qualifying vehicle for business travel. Therefore, the exemption for AMAPs and MAR may be available when the family accompanies the employee but not when the family travels alone. The additional exemption for passenger payments is unlikely to be available for family members who accompany the employee. This is because qualifying passengers have also to be employees for whom the travel is business travel.