Fleet News

Government turns spotlight on approved mileage payments

THE Inland Revenue is now studying why company car levels have changed and is focusing on the impact of tax and National Insurance-free Approved Mileage Allowance Payments (AMAP).

These allow for the use of a private vehicle with drivers able to claim 40 pence per mile for the first 10,000 business miles covered and 25 pence for any further mileage.

In the lead-up to this year's Budget, the Association of Car Fleet Operators called for a reduction and major overhaul of the AMAP system.

Director Stewart Whyte said: 'The Inland Revenue must take action to counteract the undue pessimism among drivers that the tax changes spell increased benefit-in-kind bills.

'In fact, the Inland Revenue's admission that reduced company car tax revenue is being offset by increases in revenue following the introduction of alternative schemes underlines ACFO's view that such plans are not always financially attractive to drivers or to employers.

'Take into account that many drivers opting for these schemes are not choosing environmentally-friendly cars and it is clear to ACFO that the Government will act to reverse the trend away from company cars. This will inevitably see AMAP rates reduced, perhaps quite sharply, and many of the recently introduced ECO and PCP schemes will be thrown into turmoil.'

British Vehicle Rental and Leasing Association director general John Lewis said the association was also concerned about the impact of AMAP.

'From our research, we have identified that that there are more than two million private cars used on business trips each year, up considerably over the past three years.

'It looks like the generous rates are stimulating employees to use own cars for occasional trips rather than public transport or daily rental. This throws up several issues, particularly health and safety and the encouragement to cover more miles than may be necessary to make a good tax free 'profit' on the journey.

'And that is not to mention the environmental impact through the stimulus of greater mileages in what could be older and more polluting cars.'

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