AMAP rates will not change

The Government has finally confirmed that approved mileage allowance payments (AMAP), which are paid to four million employees who drive their own cars for work, will not be increased.

There has been months of speculation over whether the rates would be amended, especially with the recent dramatic rise in the cost of fuel.

AMAPs have been under review for more than a year and many, including the country’s largest union – Unison – were pushing for a rate increase to ensure employees who use their own vehicles for work were not out of pocket.

Following the recent changes to the advisory fuel rates (AFR) speculation grew that AMAPs may also be increased.

However, HMRC has said that the review is over and the rates will remain unchanged.

They have been fixed at 40p for the first 10,000 miles and 25p for every mile thereafter for the past six years.

“AMAPs are a statutory scheme and can therefore only be altered by the Government as part of the Finance Bill and Budget cycle,” said an HMRC spokesman.

“AMAP rates are intended to cover the costs associated with using a private car for business journeys.

"However, the AMAPs rules have to cater for a wide range of car drivers and strike a balance between giving tax relief for amounts which represent fair recompense for car use, but not for profit.

"As 4 million employees use the AMAP rates and 70% of these drive less than 4000 miles, the Government considers that the rates do strike an appropriate balance between covering the running costs of all cars, large and small, and delivering its environmental policy.”

The spokesman said any increase in the rates “could encourage some employees to drive more miles, particularly in older more polluting cars where most of the lifetime depreciation has already occurred”.

Employers can reimburse employees for business miles travelled using their own cars up to the maximum rate per mile. Any payments over the rates will be taxable on the employee. If payments are made which are below the maximum rate per mile, the difference can be claimed by the employee, usually via the self assessment tax return form. A passenger allowance of 5p per passenger may be payable in some circumstances. The passenger must be a fellow employee and the employee must receive the allowance from the employer.