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What are approved mileage allowance payments?

If you use your own car on business, the amount of expenses you can claim tax-free are set by the government. Here's how much you can expect to be paid...

Woman re-fuelling Mini Cooper SD at petrol station

Driving your own car on business rather than one supplied by your company can be expensive. Any work trip means paying for fuel, and brings the car's next service a few miles closer. Then there's wear and tear on the tyres, wipers, clutch and more, not to mention insurance and depreciation.

The HMRC publishes Mileage Allowance Payment (MAP) rates, that show how much you can be reimbursed for your business motoring costs without having to pay any tax.

How much can I claim based on Mileage Allowance Payment (MAP) rates?

How much you can claim depends on how many miles you have driven on business, and the kind of vehicle you are using.

Tax: rates per business mile:

 

    First 10,000 miles

    Above 10,000 miles

Cars and vans

    45p

    25p

Motorcycles

    24p

    24p

Bikes

    20p

    20p

The rates also differ depending on how far you have driven over the tax year, with a more generous rate for the first 10,000 miles.

Up to this mileage, drivers can claim 45p per mile. Once over 10,000 miles, the rate drops to 25p per mile. So a driver covering 12,000 miles in a year could claim £5000 (10,000 x 45p, plus 2000 x 25p).

Used test: Audi Q7 vs Land Rover Discovery vs Volvo XC90

Do the rates vary depending on the type of car I drive?

No. Unlike the advisory fuel rates payable to employees who use a company car supplied by their employer, no distinction is made between petrol and diesel cars, and it's not possible to claim a higher rate for a car with a larger engine.

So if your employer pays expenses at MAP rates, the more fuel-efficient your car, the better off you will be.

Can I claim more than MAP rates?

If your employer is happy to pay more, they can. But if they do, the extra payment over the approved amount must be disclosed to HMRC and will be treated as part of your salary. In other words, you'll be taxed on it.

What if my employer pays less?

Your bosses aren't obliged to pay MAP rates. However, if they pay less then you will be able to claim tax relief on the unused balance of the approved amount. This is called Mileage Allowance Relief (MAR).

To do so you'll need to keep a record of the date and mileage of all your journeys on business, then work out how much you would have been paid at MAP rates, and deduct what you were paid. The difference is the amount on which you can claim tax relief.

Paying at parking meter

Are all running costs covered by MAP payments?

Most, but not all. For example, you can still charge your employer for car parking or road tolls, as these are specific to each journey and not one of the general running costs that MAPs are intended to cover.

How can I make the most of the MAP rates?

Because the rates don't vary depending on the type of car you drive, the lower your car's true running costs, the better off you will be. So a fuel-efficient car with a low insurance group rating is a better choice than a thirsty car with a high premium.

Whenever practical, it's worth considering whether a journey could be completed by bicycle rather than car, as the 20p per mile payment is quite generous. Obviously a pedal cycle isn't a viable option for longer journeys, but for visiting local clients it's worth considering two wheels instead of four.

To understate company car tax in more detail, read our company car tax guide.


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