EIM31415 | Employees using own cars or vans for work: passenger payments: examples

Sections 233 & 234 ITEPA 2003

This page illustrates passenger payments, EIM31400 onwards. The employee’s own car is used in examples one and two, a company car in examples three and four (otherwise they use the same facts).

Details of how to calculate the exempt amount, the approved amount for passenger payments, are at EIM31405.

Example one

Employee J makes a business journey of 100 miles in his own car. He is asked to take two other employees, K and L, as passengers.

The employer makes mileage allowance payments of 40 pence (45 pence from 6 April 2011) per mile and passenger payments at an additional 3 pence per mile per passenger.

• approved amount for passenger K (see EIM31405): 100 miles × 5 pence = £5

• approved amount for passenger L: 100 miles × 5 pence = £5

• total approved amount = £10

• passenger payments made: two passengers × 100 miles × 3 pence = £6

The entire passenger payment of £6 is therefore exempt because it is less than the approved amount, but no relief is available for the additional £4 which could have been exempt had the employer made passenger payments at a higher rate.

Example two

The facts are as in example one except that the employer makes mileage allowance payments of 43 pence per mile whether or not passengers are carried.

• approved amount for this journey (as above): two passengers = £10

• passengers payment made: nil

None of the 43 pence per mile is exempt because none of it is paid specifically because passengers are being carried. There is no relief for the £10 which could have been exempt had the employer made passenger payments.

Examples three and four

The facts are as in examples one and two, except that the car is a company car (a car for which employee J is chargeable to car benefit, EIM23000).

The answers are exactly the same. The exemption for passenger payments applies to journeys in company cars as it does to journeys in the employee’s own car.