Part 4Employment income: exemptions
Chapter 2Exemptions: mileage allowances and passenger payments
Mileage allowances
229Mileage allowance payments
(1)
No liability to income tax arises in respect of approved mileage allowance payments for a vehicle to which this Chapter applies (see section 235).
(2)
Mileage allowance payments are amounts, other than passenger payments (see section 233), paid to an employee for expenses related to the employee’s use of such a vehicle for business travel (see F1sections 235A and 236(1)).
(3)
Mileage allowance payments are approved if, or to the extent that, for a tax year, the total amount of all such payments made to the employee for the kind of vehicle in question does not exceed the approved amount for such payments applicable to that kind of vehicle (see section 230).
(4)
Subsection (1) does not apply if—
(a)
the employee is a passenger in the vehicle, or
(b)
the vehicle is a company vehicle (see section 236(2)).
230The approved amount for mileage allowance payments
(1)
The approved amount for mileage allowance payments that is applicable to a kind of vehicle is—
where—
M is the number of miles of business travel by the employee (other than as a passenger) using that kind of vehicle in the tax year in question;
R is the rate applicable to that kind of vehicle.
(2)
The rates applicable are as follows—
Kind of vehicle | Rate per mile |
|---|---|
Car or van | F245p for the first 10,000 miles |
| 25p after that |
Motor cycle | 24p |
Cycle | 20p |
(3)
The reference in subsection (2) to “the first 10,000 miles” is to the total number of miles of business travel in relation to the employment, or any associated employment, by car or van in the tax year in question.
(4)
One employment is associated with another if—
(a)
the employer is the same;
(b)
the employers are partnerships or bodies and an individual or another partnership or body has control over both of them; or
(c)
the employers are associated companies within the meaning F3given by section 449 of CTA 2010.
(5)
In subsection (4)(b)—
(a)
“control”, in relation to a body corporate or partnership, has the meaning given by F4section 995 of ITA 2007 (in accordance with section 719 of this Act), and
(b)
the definition of “control” in that section of that Act applies (with the necessary modifications) in relation to an unincorporated association as it applies in relation to a body corporate.
(6)
The Treasury may by regulations amend subsection (2) so as to alter the rates or rate bands.
231Mileage allowance relief
(1)
An employee is entitled to mileage allowance relief for a tax year—
(a)
if the employee uses a vehicle to which this Chapter applies for business travel, and
(b)
the total amount of all mileage allowance payments, if any, made to the employee for the kind of vehicle in question for the tax year is less than the approved amount for such payments applicable to that kind of vehicle.
(2)
The amount of mileage allowance relief to which an employee is entitled for a tax year is the difference between—
(a)
the total amount of all mileage allowance payments, if any, made to the employee for the kind of vehicle in question, and
(b)
the approved amount for such payments applicable to that kind of vehicle.
(3)
Subsection (1) does not apply if—
(a)
the employee is a passenger in the vehicle, or
(b)
the vehicle is a company vehicle.
232Giving effect to mileage allowance relief
(1)
A deduction is allowed for mileage allowance relief to which an employee is entitled for a tax year.
(2)
If any of the employee’s earnings—
(a)
are taxable earnings in the tax year in which the employee receives them, and
(b)
are not also taxable earnings in that year that fall within subsection (3),
the relief is allowed as a deduction from those earnings in calculating net taxable earnings in the year.
(3)
If any of the employee’s earnings are taxable earnings in the tax year in which the employee remits them to the United Kingdom, there may be deducted from those earnings the amount of any mileage allowance relief—
(a)
for that tax year, and
(b)
for any earlier tax year in which the employee was resident in the United Kingdom,
which, on the assumptions mentioned in subsection (4), would have been deductible under subsection (2).
(4)
The assumptions are—
(a)
that subsection (2)(b) does not apply, and
(b)
where applicable, that the earnings constitute taxable earnings in the tax year in which the employee receives them.
(5)
Subsection (3) applies only to the extent that the mileage allowance relief cannot be deducted under subsection (2).
(6)
A deduction shall not be made twice, whether under subsection (2) or (3), in respect of the same mileage allowance relief.
F5(6A)
If the earnings from which a deduction allowed under this section is deductible include earnings that are “excluded” within the meaning of section 15(1A)—
(a)
the amount of the deduction allowed is a proportion of the amount that would be allowed under this section if the tax year were not a split year, and
(b)
that proportion is equal to the proportion that the part of the earnings that is not “excluded” bears to the total earnings.
(7)
In this section “taxable earnings” or “net taxable earnings” means taxable earnings or net taxable earnings from the employment for the purposes of Part 2.