The Chartered Institute of Taxation (CIOT) has welcomed the change in the rate of mileage allowance payments that can be paid tax free to employees who use their own cars for business, together with the extension of this to volunteers.
Tina Riches, Director, Technical at the CIOT said:
“The CIOT recently wrote to the Minister, David Gauke, highlighting the problems for business with the current rates, following representations from our members. Therefore, we are delighted that the Government has listened and increased the main Approved Mileage Allowance Payments (AMAPs) rate from 40p to 45p for the first 10,000 miles of business use with effect from 6 April 2011 to reflect recent increases in fuel costs.
“There is a case for the rate going up to 50p, as we suggested, but this change will improve the current situation of the rate being below the cost of running a car.”
HMRC have confirmed that the new rate will extend to the mileage allowance relief which employees can claim if they are reimbursed less than the AMAP rate.
“This will be welcomed by employees whose employers choose not to pay the maximum amount,” said Tina Riches.
Volunteer drivers are also helped by the changes. They can claim the full cost of their volunteer driving with appropriate records, or use the AMAP rate instead of having to retain detailed records.
Tina Riches added:
“Allowing volunteer drivers to claim the full cost of driving will be widely welcomed by the charitable sector. We are also very pleased to note that the allowance for passenger payments of 5p per mile which employees can claim will now be extended to volunteers. This is a sensible pragmatic measure which will encourage shared use of vehicles by volunteers.”
Notes to Editors
- The increase in mileage allowances from 40p to 45p a mile will take effect from 6 April 2011.
23 March 2011