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Mileage allowance - 45p/25p

I had a feeling that at some point the Revenue have said that the (now) 45p/25p AMAP rate is "representative" rather than being intended to cover the full cost so it shouldn't be taken as authoritative on the cost of running a car. However, I now can't find where I've seen that. Can anyone help? (I may be remembering/looking for somthing that doesn't exist.)

Obviously some people will make a profit and some will make a loss at those rates, and it's far simpler than the old FPCS - but that's me saying that rather than the Revenue.


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My understanding ...

like yours was that these rates could be used as an approximation of cost without evidence and would not yield a BIK. I have interpreted that (although never bothered to act on) as if you provide evidence of a higher cost then you could use that higher figure.

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AA car costs

Hi - I'm pretty sure the original 40p was based on The AA's mileage costs for a car of up to £12,000 running 10K miles per annum.  If you look at their 2011 table this now stands at 45p.

Given that the intention is not to reward higher carbon producers this seems fair.

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Client who pays less

Thanks Steve and Paul.

The reason for the question is that I have a client who pays less than 45p - but for home to work travel, so the employees cannot claim the difference. The employee is challenging the amount paid on the grounds that the Revenue's figure is 45p. The employer's looked at the AA figures for that group of employees and is paying what seems fair on average (and grossing up so that the employee is left with the AA figure net). An extreme case of "but the Revenue must be right" I think!

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The sums paid are taxable

Hi - this may be stating the "bleedin obvious" but, ignoring fairness of the rate, is the client taxing the mileage paid for home to work, or am I missing something?

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Yes - Paul - amount paid is being taxed

AA figure is grossed up and put through the payroll so that the employee is left with the AA amount in his sticky paws (see previous post.) There's no doubt that this is taxable - it's home to work mileage. What the client is tryng to do is defend the amount he's paying. (I have my own views on how to do that but he wants to be able to show that theb Revenue don;t view the 45p as an absolute.) 

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Tell them they should be grateful for anything

You have explained that the employer is paying mileage for the cost of the commute and in fact is grossing this up so that the employee receives the amount net.


Frankly I would tell them they should be grateful they are getting something and that if they are not happy they no what to do. There are plenty of people that would be happy to get something for their daily travel.


Have you compared the rate they are getting to the fuel only rates. If I had a snotty employee I would suggest this may be a route to justify the rate being paid but as I have already said I don't think the employer has to justify themselves at all in this case.

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I entirely agree!

Thanks Valentino. I entirely agree! However, comment by the Revenue counts for more than comment by a mere mortal like me unfortunately. The rate compares not at all badly to the running costs per mile issued by the AA (though these need to be adjusted for fuel prices). Personally, I'd be grateful for any contribution towards my commute, but you know what people are like! 

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Mileage allowances

Follopw this link

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From my experience

when an employer moves premises it offers to cover the additional costs to the employee rather than lose them.   I had to do this a number of years ago for a part time worker who has since moved on.  For us losing that employee would have been a much greater cost including finding someone new than additional salary to cover trhe comute.We did not do it by using the mileage rate, just a hike in salary..

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Mileage Allowance

The HMRC rates are absolute in terms of what can be reimbursed without incurring atax / NICs liability.  Also employees can claim a tax deduction if less then the AMAP rate is paid.

The postings above appear to be concerned with only the tax aspects, but as it relates to home to work mileage payments, there is a Class 1 NICs liability.

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Thanks for replies so far...

I'm aware of the tax and the NIC rules. What I was hoping to find somewhere was Revenue comment that the 45p is not authority for the fact that it actually costs 45p per mile. (I know it's obvious - but people seem to believe the Revenue over and above anyone else!)

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A starting point?

Here is a link to a CIOT letter to the Minister - not HMRC but it might help. 

I suspect the very last paragraph is the best indicator for you.

Before 6 April 2002 the mileage rates were expected to more than cover the full costs of running cars -   

The fuel only rates continue to look at real costs -   

The changes in 2002 reduced the mileage payable for large cars and made it the only claim available for employees as they could no longer claim the real costs where they were higher.

The purpose of the change was to encourage people to move to smaller more efficient cars.

I have copied this table to demonstrate the move to statutory rates if you are interested.

Fixed Profit Car Scheme

Under the Fixed Profit Car Scheme (FPCS) the maximum tax free mileage allowances for employees using their own cars for business are as follows:



 2001/022000/01 First 4,000 business milesBusiness miles over 4,000First 4,000 business milesBusiness miles over 4,000Engine Capacity    Up to 1000cc40p25p28p17p1001cc - 1500cc40p25p35p20p1500 - 2000cc45p25p45p25pOver 2000cc63p36p63p36pFlat rate42.5p25p40p22.5p




Payments in excess of FPCS rates – excess is taxable. Payments at less than FPCS rates - employees can claim tax relief for shortfall. Employees can also claim tax relief for some of their interest paid on a loan to buy a car used for business.
 NICO use the FPCS mileage rates for up to 4,000 miles. If the employer's mileage rate is above these rates, there will be a NIC liability on the excess.

2002 and Beyond -

Proposed rates from 6 April 2002 are 40p per mile for the first 10,000 business miles and 25p per mile thereafter, regardless of engine capacity.


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Thanks Marion

Thank you to all who answered this

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Marion ...

... I can't open the link, I just get a blank page.

I have tried fiddling with the encryted pages setting!

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I can open the links

Sorry OGA - must be something in your settings but I'm no IT wiz!

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My IT guys gets really antsy when I start fiddling with settings - I had to threaten him with whips and chains to let me have admin rights in the first place - lol

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... tries on a different PC and opens fine, but not on my main one, I even tried going in from scratch on the CIOT website, got as far as the link to the letter and then ...      ... nothing! :o\

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It is OK ...

... IT have sorted it out.

My IT section are fantastic, if anyone wants their details try here:


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Glad you sorted it out

I love that programme - my favourite It joke for years was the new microsoft keyboard 

scroll down till you see the image


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If you're interest in this issue, try our company car group

While this isn't strictly a company car issue, it is obviously something that appeals to those of an automotive persuasion. If you would like to delve into car tax and other related issues, come and join our new Company Car discussion group.

Get your motors running!

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