Approved mileage allowance payments (AMAPs) are payments made to employees to cover the expenses incurred in using their own private cars for business. AMAPs are designed to include fuel, insurance, serving and depreciation.
AMAPs should not be confused with advisory fuel rates (AFRs) – rates used to reimburse employees for business fuel used in company cars.
Businesses can pay employees up to the approved AMAP figure without tax being payable on them – HMRC sets the rates with the aim of ensuring fair repayment for employees without actually becoming profitable. This is a difficult balance to strike, as it has to cover a vast range of vehicles.
Currently, the rate is 45p for the first 10,000 miles and 25p for every mile thereafter. Employers can pay up to this figure, and employees can claim for non-reimbursed expenses.
Between 2010 and 2015, tax relief claims rose by 25 per cent to £800m. Naturally, this is bad news for the Treasury, which has launched a call for evidence to assess why this has increased.
The Treasury has claimed that the government has no plans to remove the relief on employee expenses, but aims to understand the following: if the current rules or their administration can be clearer; whether the tax rules for expenses are fit for purpose; and why the cost to the exchequer of the tax relief for expenses which are not reimbursed has increased.
The call for evidence closed on July 10 2017, so watch this space.