In a written statement, the UK government has confirmed that amounts paid by an employer to an employee to reimburse the cost of business travel in the employee’s own vehicle are only free of tax and NICs if those payments are within the approved mileage allowance payments (AMAPs) rules.
The HMRC AMAPs are the long-standing rates for cars and vans of 45p per mile for the first 10,000 miles and 25p per mile after that.
Where amounts reimbursed by the employer do not exceed the AMAPs, those amounts are exempt from tax and NICs. Amounts over the allowances need to be returned on the employee’s P11D. The government has confirmed it recently misrepresented the position on the latter point, having said that employers could reimburse actual amounts incurred free of tax and NICs, providing they could show evidence of the actual costs. The statement confirms that the exemption only applies if the payments do not exceed the approved amount and notes that HMRC is taking steps to bring the inaccuracy to the attention of employers and employees ‘where necessary’. The statement also says that ‘should any cases arise HMRC will work on an individual basis aiming to ensure that any taxpayers who relied on incorrect information are not disadvantaged.’
In a written statement, the UK government has confirmed that amounts paid by an employer to an employee to reimburse the cost of business travel in the employee’s own vehicle are only free of tax and NICs if those payments are within the approved mileage allowance payments (AMAPs) rules.
The HMRC AMAPs are the long-standing rates for cars and vans of 45p per mile for the first 10,000 miles and 25p per mile after that.
Where amounts reimbursed by the employer do not exceed the AMAPs, those amounts are exempt from tax and NICs. Amounts over the allowances need to be returned on the employee’s P11D. The government has confirmed it recently misrepresented the position on the latter point, having said that employers could reimburse actual amounts incurred free of tax and NICs, providing they could show evidence of the actual costs. The statement confirms that the exemption only applies if the payments do not exceed the approved amount and notes that HMRC is taking steps to bring the inaccuracy to the attention of employers and employees ‘where necessary’. The statement also says that ‘should any cases arise HMRC will work on an individual basis aiming to ensure that any taxpayers who relied on incorrect information are not disadvantaged.’
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