Mileage Rates for Employees
Employers can pay their employees the approved mileage rate, to cover mileage expenses for any business trips made in the employee’s own car, van, motor bike or bicycle.
What mileage rate can employees claim?
The standard mileage rate applies to employees. They can claim 45ppm for the first 10,000 miles travelled by car or van. They can also claim 25 ppm for each additional mile over 10,000 miles. If the employee is travelling by motorcycle, the mileage rate is 24ppm; for using a bicycle, the mileage rate is 20ppm.
These rules do not apply to an employee driving a company car or van.
Do I need to pay income tax and national insurance on these payments?
These payments can be made free of income tax and national insurance, provided the following rules are met:
- The payment must be made to you personally (e.g. not to a loan company providing you with a car);
- The payment can only be to cover expenses incurred by you in your own transport for work journeys ;
- The payment must be within the “Approved Mileage Allowance Payments” rate;
- You must keep proper records of your business journeys.
Mileage expenses incurred through commuting to work or on private journeys are not covered by the payment.
What records do I need to keep?
If your employer pays you the AMAP rate, the employer will not record it on the P11D or P9D, and you do not need to record it on your tax return. However, you do need to keep an accurate mileage log recording all your business journeys; in a mileage log book, a spreadsheet, or online. Use Tripcatcher mileage log, the no-fuss way to log your business mileage: just click on the sign up link at the top of the screen.
What if my employer pays less than the AMAP rate?
If your employer pays you less than the “Approved Mileage Allowance Payments” rate, you can claim the difference against your tax bill for the year. This is called Mileage Allowance Relief (MAR) and can be offset against your taxed employment income for the tax year, but only against tax from the same employment.
Can my employer pay more than the AMAP rate?
If your employer pays you more than the AMAP rate, the excess will be recorded on your P11D or P9D. Either income tax must be paid on the excess at your maximum tax rate, or the whole amount must be taxed and you can claim the AMAP rate as tax relief. The employer will also have to pay national insurance on it.
It is very unlikely an employer will pay more unless there are exceptional circumstances. For example, if you drive a 4x4 visiting different farms, your real mileage costs could be well in excess of those allowed by AMAP.
Can I get paid to carry passengers?
Yes, if the passengers are also employees. Your employer can pay an additional 5 pence per mile for each passenger.
However, if your employer does not choose to pay for passengers, you cannot claim the difference against your tax bill.
What if I work for more than one employer?
If you work for more than one employer during the year, the business mileage from both employers is added together to determine when you pass the 10,000 mile threshold. After you have travelled 10,000 miles on business trips, the AMAP is reduced from 45ppm to 25ppm. This only applies if you drive a car or a van.
What if I am based at home?
HMRC usually consider working from home as a convenience rather than a necessity, therefore the journey to the workplace is still considered a commute and cannot be claimed as a business journey.
If you are paid mileage expenses for commuting, the payment is taxable and must be reported on the P11D.
Can I claim emergency call-out mileage from home?
Employees can only claim for emergency call-out mileage expenses in exceptional circumstances. The following criteria must be met:
- The employee has to give advice on the emergency before starting the journey;
- The employee accepts responsibility for those aspects of the emergency that fall within their job role;
- The employee has continued responsibility for the emergency whilst travelling to the workplace.
