When your employee is using their own vehicle for business purposes, you can pay them Mileage Allowance Payments (MAPs) to cover some of the associated costs.
Each year, you can pay your employee a certain amount of MAPs – and as long as the total doesn’t go over the ‘approved amount’, you don’t need to report this to HM Revenue & Customs (HMRC) either, making the whole process much easier.
Finding the ‘approved amount’ is pretty simple; just multiply the person’s business travel miles for the year by the rate per mile for their vehicle.
These are the current rates for cars/vans, motorcycles and bikes:
Tax: rates per business mile
Type of vehicle |
First 10,000 miles |
Above 10,000 miles |
Cars and vans |
45p (40p before 2011 to 2012) |
25p |
Motorcycles |
24p |
24p |
Bikes |
20p |
20p |
If what you pay your employee exceeds the approved amount then you must:
- report on form P11D
- add anything above the ‘approved amount’ to the employee’s pay, and deduct and pay tax as normal
If the amount falls below the approved amount then don’t have to report this to HMRC, 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) – there's more information on this here
If you’d like to know more about mileage claims for your business, give us a call on 01454 300 999, or drop an email to info@fd-works.co.uk
Find out more about the FD Works’ approach to finance at fd-works.co.uk