EIM31360 | Employees using own vehicles for work: mileage allowance payments: monthly lump sum plus lower mileage rate

Section 230 ITEPA 2003

This page illustrates the calculation of chargeable mileage allowance payments and mileage allowance relief (EIM31235) where an employee receives a fixed monthly lump sum and a (normally) lower rate per mile for business travel (EIM31260) in their own vehicle.

All payments must be mileage allowance payments (MAPs, see EIM31210), which means that the lump sum element must be calculated so as to cover only the business proportion of the standing costs of the car. It must not be a payment made merely because the employee no longer has a company car; that is not a mileage allowance payment.

Example: For 2025 to 2026

Employee G uses their own car for business travel. G covers 8,000 miles of business travel in it in the tax year 2025 to 2026. G’s employer pays employees who regularly use their own cars for business travel a monthly lump sum plus a lower mileage rate. G is paid £70 per month (based on the employer’s calculations of the typical business proportion of the standing costs of owning and using the car) plus 35 pence per mile of business travel.

Step 1: find the amount of mileage allowance payments (MAPs) received

• £70 × 12 months = £840

• 8,000 miles × 35 pence per mile = £2,800

• Total mileage allowance payments received = £3,640 (£840 + £2,800)

Step 2: deduct the approved (exempt) amount (see EIM31230)

8,000 miles × 45 pence = £3,600

Step 3: is the answer positive or negative?

The answer is positive:

• excess over AMAPs is taxable and reported on P11D, in this example the amount in excess over AMAPs is £40

• AMAPs exempt amount is £3,600