Increase “out of date” mileage allowance rates, says ATT

Mileage allowances rates should be increased to reflect the increasing cost to employed workers who use their own vehicles for business use, says the Association of Taxation Technicians (ATT).¹
Approved Mileage Allowance Payments (AMAPs),² allow employers to make tax-free payments up to certain limits to their employees when those employees carry out business travel in their own cars, vans, motorcycles or cycles.
However, the current rates³ have been unchanged at for at least 10 years and in some cases several decades more.
Senga Prior, chair of ATT’s Technical Steering Group, said:
“In the light of inflation reaching a nearly 40-year high last year, the Government should consider uprating the amounts for mileage allowance payments to better reflect the current costs of running and maintaining a personal vehicle used for business travel.
“The main rate for cars and vans for the first 10,000 miles was last changed in April 2011 and the rates for mileage in excess of that limit, or any mileage on a motorcycle or cycle, have been unchanged since at least 2001.
“These rates are so out of date that employees doing business mileage are effectively left out of pocket.
“However, if an employer voluntarily chose to pay higher mileage rates which were better reflective of the cost to the employee, this would create tax implications for both employer and employee, as well as significant administration for the employer and HMRC.”
ATT has also called for the mileage allowances to be reviewed on an annual basis and updated again if required.
It says increasing the rates would also mean that, should some employers be unable or unwilling to increase their payment rates, employees would at least be able to obtain some tax relief on the difference between what they had been reimbursed for business mileage and what they could have been entitled to.