Mileage Rates
Employees may need to be reimbursed when they have incurred costs relating to business travel.
The reimbursement rates will vary dependent upon if the employee has used their own personal vehicle for the business travel or if they have used a company vehicle and merely incurred fuel costs.
Questions you may ask:
- What is the maximum amount I can pay an employee for business mileage driven in their own personal car?
- Does having more than one person travelling in the car affect the rate?
- Are there bands for repayment if my driver is doing more than 10,000 miles per year?
How Does It Work?
Approved Mileage Allowance Payments for privately owned vehicles (AMAPs)
The below statutory mileage rates are used to calculate the maximum amount that can be paid free of income tax under the AMAPs legislation.
For cars and vans only an additional payment of 5p per mile can be paid free of income tax to employees that use their personal vehicle on a business journey and are accompanied by colleague for whom the travel is also business travel.
| Up to 10,000 Miles | Over 10,000 Miles | |
|---|---|---|
| Cars and Vans | 45p | 25p |
| Motorcycles | 24p | 24p |
| Bicycles | 20p | 20p |
The 10,000 miles threshold does not apply to National Insurance (NIC)
Company Car Advisory Fuel Rates (AFRS)
Advisory Fuel Rates are used as a method of reimbursing employees for fuel used on business mileage, and for employees to repay the cost of fuel for private transport.
Paying a rate per mile at or lower than AFR means there is no taxable profit and no Class 1A national insurance to pay. You can use rates which better reflect your fleet, for example if your cars are more fuel efficient. Any excess over these rates will be treated as taxable profit.
As at the 1st March 2020
| Engine Size | Petrol | Diesel | LPG |
|---|---|---|---|
| 1,400cc or less | 12p | 9p | 8p |
| 1,401cc to 1,600cc | 14p | 9p | 10p |
| 1,601cc to 2,000cc | 14p | 11p | 10p |
| 2,001cc or above | 20p | 13p | 14p |
ADVISORY FUEL RATE FOR ALL ELECTRIC AND HYBRID CARS
A Rate of 4p per mile for pure electric vehicles. The new rate for electric cars is called the Advisory Electricity Rate (AER).
Hybrid and Plug-in Hybrid company cars will continue to be treated as either petrol or diesel models for mileage reimbursement purposes.
The Company Car Advisory fuel rates are reviewed four times a year. These will be published on the HM Revenue & Customs (HMRC) website shortly before the date of change.
The revised rates will take effect at the beginning of each calendar quarter on 1 March, 1 June, 1 September and 1 December.
The information provided is based on existing and proposed legislation as at March 2020 (11th March 2020 UK Budget). Whilst every effort has been made to ensure that information given is accurate and not misleading, this information is intended to provide a quick reference to the current tax regulations relating to company vehicles and how they impact employers and employees. The content has been provided for informational purposes only and should not be relied on as a substitute for professional advice. No responsibility can be accepted by LetsTalkFleet Ltd for any loss or liability occasioned by any person acting on or refraining from action as a result of viewing this information.