HMRC’s Income Tax Policy Team has indicated that over the last 6 months, both HMRC & HM Treasury have received a large number of queries relating to Approved Mileage Allowance Payments (AMAPs), which may be paid to employees free of tax and NI for any business miles travel they do in their own vehicle (not a company car).
Many asked the Government to increase the pence per mile figure to reflect higher fuel costs. The confirmed on Monday 5th September is a ministerial statement that the Government’s position on this issue has not changed and, like all parts of the tax system, AMAPs remains under review.
However, previously in issuing responses HMRC have identified they have used an incorrect line, which said they would allow employers to reimburse actual amounts incurred (tax and NICs free) providing they could show evidence of these costs. They now confirm that this is, regrettably, technically inaccurate and the Government has issued a statement to correct the mistake.
The Government has become aware of a technical inaccuracy in its responses to a number of Parliamentary Questions, correspondence and a Parliamentary e-petition response on the subject of Approved Mileage Allowance Payments (AMAP) from March to August 2022.
The response stated that actual expenditure in relation to business mileage could be reimbursed free of Income Tax and National Insurance contributions. This is in fact only possible for volunteer drivers. Where an employer reimburses more than the AMAP rate, Income Tax and National Insurance are due on the difference. The AMAP rate exists to reduce the administrative burden on employers.
The guidance available on GOV.UK has been correct throughout and the government believes that the number of taxpayers who could be affected is very small.
HMRC is also taking steps to bring this inaccuracy to the attention of employers and employees where necessary. Should any cases arise HMRC will work on an individual basis aiming to ensure that any taxpayers who relied on incorrect information are not disadvantaged.
It is worth noting that during this time HMRC guidance has been correct and they do not expect many employers to pay above the 45p per mile amount tax and NICs free.