Mileage Allowance Relief

Where an employer does not pay a mileage allowance to an employee who uses his or her own car for work or pays an allowance which is less than the approved amount, the employee can claim tax relief for the shortfall. This can be done in the employee’s self-assessment return, on form P87 or by writing to HMRC.

Approved Mileage Allowance Payments (AMAPs) scheme allows employers to pay tax-free mileage allowances to employees who use their own cars for business journeys, as long as the allowance paid does not exceed the approved amount.

Any amounts paid in excess of the approved amount are taxable and must be notified to HMRC on the employee’s P11D.

The approved amount is found by the formula

M x R


M is the number of miles of business travel by the employee (other than as a passenger) using that kind of vehicle in the tax year in question; and

R is the rate applicable to that kind of vehicle.

For 2013/14 the rates are as follows:

  • Cars and vans 45p per mile for the first 10,000 business miles and 25p per mile after that
  • Motor cycles 24p per mile
  • Cycles 20p per mile