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    TaxKilnUK tax guidance
    TaxKilnUK tax guidance

    Approved Mileage Allowance Payments (AMAP)

    AMAP, Approved Mileage Allowance Payments, is HMRC's flat-rate mileage scheme for employees + directors using their own vehicle for business travel. From 6 April 2026 the car/van rate rises from 45p to 55p per mile for the first 10,000 business miles (Reeves announcement 20 May 2026, BACKDATED to start of tax year). The 25p rate for over 10,000 miles is unchanged. Motorcycle (24p flat) + bicycle (20p flat) rates also unchanged. Employer reimbursements UP TO the AMAP rate are entirely tax-free + NI-free for both employer + employee. If the employer pays LESS than AMAP, the employee can claim Mileage Allowance Relief (MAR) on the shortfall via P87 or Self Assessment. For Ltd Co directors using their own car for business travel, AMAP reimbursement is one of the most overlooked legitimate extraction routes, the company deducts the full amount + the director receives it tax-free.

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    What this relief is, in plain English

    AMAP is HMRC's standard mileage-reimbursement framework for employees + directors using their own personal vehicle for business travel. The mechanic is simple: you log business miles, your employer (or your own Ltd Co, if you're a director) reimburses you at the AMAP rate, the reimbursement is tax-free + NI-free, + your employer can deduct the cost against profits. From 6 April 2026 the car/van rate rises from 45p to 55p per mile for the first 10,000 business miles, the first change to AMAP since 2011 + a meaningful uplift recognising 14+ years of fuel-cost inflation. The 25p rate above 10,000 miles is unchanged; the 24p motorcycle + 20p bicycle rates are unchanged. AMAP is one of the cleanest UK tax reliefs because it's procedural: pay at the rate, log the miles, no further tax mechanics required. The complications come at the edges, what counts as business travel (commuting excluded), the 24-month rule for temporary workplaces, the salary-sacrifice OpRA interaction (avoid using AMAP via salary sacrifice, use direct reimbursement of actual mileage instead), + the under-claim trap where employers paying below AMAP miss the opportunity for employees to claim Mileage Allowance Relief on the shortfall via P87 or SA.

    How it works

    AMAP rates 2025/26 + from 6 April 2026

    Rates are set per vehicle type. **Cars + vans 2025/26**: 45p/mile first 10,000 business miles; 25p/mile above. **Cars + vans from 6 April 2026 (backdated)**: 55p/mile first 10,000 business miles; 25p/mile above, Reeves announcement 20 May 2026, first change to AMAP rates since 2011. **Motorcycles**: 24p/mile (flat, unchanged). **Bicycles**: 20p/mile (flat, unchanged). **Passenger supplement**: +5p/mile for each fellow employee carried on the same business journey. The 10,000-mile threshold resets per individual per tax year (it's a per-person not per-vehicle limit).

    Tax + NI treatment, exemption up to AMAP rate

    Reimbursements paid AT or BELOW the AMAP rate are entirely tax-free + NI-free for both employer + employee. No P11D reporting. The employer can deduct the full amount as a business expense (Corporation Tax for Ltd Cos, trading expense for sole traders/partnerships). Reimbursements ABOVE the AMAP rate generate taxable + NI-able pay on the excess only, employers must report via P11D (or payroll if benefits payrolled). The under-payment scenario (employer pays below AMAP) means the employee can claim Mileage Allowance Relief on the shortfall.

    Mileage Allowance Relief (MAR) on employer under-payment

    If an employer pays LESS than the AMAP rate per business mile (e.g. 30p/mile vs the 55p AMAP rate from April 2026), the employee can claim Mileage Allowance Relief on the shortfall. Claim via P87 form (HMRC online) for non-SA employees, or via Self Assessment for SA filers. Relief equals (AMAP-equivalent × business miles) minus (employer actual payment), multiplied by the employee's marginal income tax rate. Backdating up to 4 previous tax years allowed. Many under-paid employees miss this relief because they're not aware of the gap between employer policy + AMAP, the rise to 55p/mile in 2026 will widen the gap for employers who haven't updated their mileage policies.

    Director use, overlooked extraction route

    Ltd Co directors using their own personal car for genuine business travel can reimburse themselves at AMAP rate via the company. The company deducts the full cost against Corporation Tax; the director receives the payment tax-free + NI-free (up to AMAP rate); no P11D reporting needed. For a director with 8,000 business miles/year, AMAP reimbursement at the 55p rate yields £4,400/year of tax-free + NI-free income, comparable to extracting £6,500-£8,000 of gross dividend or salary depending on the director's marginal position. The exclusion to remember: ordinary commuting (home to permanent workplace) is NOT business travel, only genuine site visits, client meetings, supplier travel, etc. qualify.

    Who qualifies

    Interactions with other reliefs

    Company car BIK + Fuel Benefit

    AMAP is mutually exclusive with company car benefit-in-kind on the same vehicle/journey. If the employee uses a COMPANY-provided car, the BIK regime applies (with EV at 3% rising to 7% by 2028/29) + employer can reimburse business fuel cost via the advisory fuel rate (different + lower than AMAP). AMAP only applies to PRIVATELY-OWNED vehicles used for business. Choose carefully at the point of vehicle acquisition: privately owned + AMAP vs company-provided + BIK regime. For high-mileage business users with petrol/diesel cars, AMAP usually wins. For low-mileage EV users, company-provided EV with 3% BIK often wins.

    Simplified Expenses (sole trader cash basis)

    Sole traders + partnerships using cash-basis accounting can choose Simplified Expenses for vehicle use, 45p/mile first 10,000 + 25p above (currently mirrors AMAP rates) OR claim actual vehicle costs apportioned by business use. From April 2026 when AMAP rises to 55p/mile, SIMPLIFIED EXPENSES for sole traders may or may not track this increase (HMRC has historically aligned the two but each is set separately). Check current HMRC simplified expenses guidance at the start of each tax year. Sole traders choosing simplified expenses lock in for the life of the vehicle.

    Trivial Benefits (ITEPA 2003 s.323A)

    Independent reliefs serving different purposes. AMAP covers mileage reimbursement. Trivial Benefits (£50/occasion, £300 director annual cap) covers small non-cash gifts. Both can be claimed independently in the same year. A Ltd Co director can receive AMAP for business mileage + receive 6 × £50 trivial benefits in the same year (£300 cap), total tax-free benefits potentially several thousand pounds across both reliefs.

    Pension Annual Allowance + Carry Forward

    AMAP reimbursement is NOT pensionable pay (it's reimbursement of cost, not employment income). It does NOT count towards the employee's annual pensionable salary for Auto-Enrolment minimum contribution calculations + does NOT count as 'relevant UK earnings' for personal pension contribution limits. This means AMAP doesn't unlock additional pension contribution capacity for a low-salary high-mileage employee, that capacity comes from salary + bonuses.

    Common mistakes + audit triggers

    Worked example

    Diego, Newcastle - Self-employed IT consultant operating via Ltd Co with high business mileage to client sites (2026/27)

    Diego runs a Newcastle-based Ltd Co providing IT infrastructure consultancy to clients across the North East + Scotland. He drives his own Tesla Model 3 (privately owned) for site visits + meetings, NOT a company car. In 2026/27 he drives 12,000 genuine business miles + 7,000 private/commuting miles. His Ltd Co reimburses him at the new AMAP rate for all business miles. Diego also picks up his colleague Aisha on 60 business journeys averaging 25 miles each (1,500 passenger-mile journeys for Aisha).

    Calculation: **Business mileage reimbursement at AMAP 2026/27 rates:** - First 10,000 miles: 10,000 × £0.55 = £5,500 - Over 10,000 (next 2,000 miles): 2,000 × £0.25 = £500 - Passenger supplement: 1,500 miles × £0.05 = £75 - **Total AMAP reimbursement: £6,075** **Tax treatment:** - Diego receives £6,075 from his Ltd Co: entirely TAX-FREE + NI-FREE (all within AMAP rates) - Ltd Co deducts £6,075 against Corporation Tax, saves 25% × £6,075 = £1,518.75 in CT - No P11D reporting required (within AMAP) - No payroll processing required **Alternative comparison, equivalent gross salary:** For Diego (basic-rate taxpayer with £45,000 total income) to net £6,075 from gross salary instead, the company would need to pay gross salary of approximately £8,400 (after 20% income tax + 8% employee Class 1 NI + 15% employer Class 1 NI). The salary route would cost the Ltd Co around £9,660 gross (salary + employer NI) versus £6,075 via AMAP, AMAP is approximately **37% cheaper** to the company while delivering the same net cash to Diego. **Documentation:** Diego maintains a digital mileage log (Google Sheet or specialist app) recording date, client/destination, business purpose, miles driven for each journey. The log is the audit-defence, HMRC's standard inquiry into AMAP claims requires producing a mileage log on demand. No log = no defence = full reimbursement becomes taxable on inquiry. **Strategic note:** Diego's privately-owned EV approach (AMAP) versus a company-provided EV approach (3% BIK in 2025/26 rising to 7% by 2028/29) was the right call for his 12,000-business-mile annual usage. For lower-mileage drivers (under 5,000 business miles/year), company EV often wins because the 3% BIK on a £50,000 EV is around £375 tax/year. Above ~8,000 business miles/year, privately-owned + AMAP almost always wins.

    Statute reference: Income Tax (Earnings and Pensions) Act 2003 ss.229-235 + Schedule 7 (Approved Mileage Allowance Payments). HMRC manual: EIM31200 onwards.

    Frequently asked questions

    What happens if I miss the Self Assessment deadline?+
    The Self Assessment deadline is 31 January (online filing) for the previous tax year. Miss it and HMRC apply an automatic £100 penalty. Beyond that: £10 per day from 3 months late (capped at £900), 5% of tax due at 6 months late, and another 5% at 12 months late, under Schedule 55 of the Taxes Management Act 1970. If you have a genuine reason (serious illness, bereavement, technical issue with HMRC's systems) you can appeal with evidence; HMRC accepts reasonable excuse appeals in most genuine cases.
    Do I need an accountant or can I file Self Assessment myself?+
    Legally you can file Self Assessment yourself via gov.uk for free, most simple sole-trader returns (single income source, basic expenses) are realistic to self-file. An accountant adds real value when: your trading profit is above £40,000 (extraction-strategy decisions matter), you have multiple income streams (PAYE + self-employment + property + dividends), you've crossed the £90,000 VAT threshold, you're considering incorporation, or you have an HMRC enquiry. Expect to pay £400-£1,500/year for a typical sole-trader accountant; the cost is itself a deductible expense.
    How do payments on account work?+
    When your Self Assessment tax bill exceeds £1,000 for the first time, HMRC requires payments on account toward NEXT year's tax. Half the current bill is due 31 January (alongside the current bill); the other half is due 31 July. So your first January after crossing the threshold can hit with a double-bill: last year's balance + first payment on account. Adjust via Form SA303 if you expect next year's income to drop substantially. Payments on account don't apply if more than 80% of your tax is collected via PAYE.
    I'm a Ltd Co director, can I pay myself AMAP for business mileage in my own car?+
    Yes, and it's one of the most overlooked legitimate extraction routes for directors who do meaningful business mileage. The company pays you 55p/mile (from April 2026) for genuine business journeys in your own car; the company deducts the full amount against Corporation Tax; you receive the reimbursement tax-free + NI-free (up to the AMAP rate). No P11D reporting required. For a director driving 8,000 business miles a year, AMAP yields £4,400 (8,000 × £0.55) of tax-free + NI-free income, significantly more efficient than equivalent gross salary or dividend extraction. Documentation discipline matters: keep a mileage log with date, destination, business purpose + mileage for each trip (HMRC standard). Commute from home to your usual workplace is NOT business mileage.
    My employer pays me 30p/mile, can I claim the difference?+
    Yes, claim Mileage Allowance Relief (MAR) on the shortfall via either a P87 form (for non-Self-Assessment employees) or via your Self Assessment return (if you file SA). The relief equals the AMAP-equivalent rate × business miles MINUS what your employer actually paid you, at your marginal income tax rate. Example: 5,000 business miles in 2026/27 at AMAP 55p = £2,750 entitlement. Employer paid 30p × 5,000 = £1,500. Shortfall £1,250, relief at your 20% basic rate = £250 cash back. Higher rate taxpayers (40%) save £500 on the same shortfall. The relief is per tax year + can be backdated up to 4 years. Always keep your mileage log + employer-mileage-policy documentation.
    What counts as 'business travel' for AMAP purposes?+
    Genuine business journeys not including ordinary home-to-work commuting. Qualifying mileage includes: travel between different workplaces in the same employment; travel from home to a temporary workplace (lasting <24 months at that site); travel to client sites, meetings, supplier visits, training events, conferences. Excluded: commuting from home to permanent workplace; private journeys; private use of company business journeys. The 24-month rule on temporary workplaces is strictly enforced, once a workplace is 'expected to last more than 24 months,' it becomes a permanent workplace + travel there is commuting (not claimable). HMRC's EIM31200+ manual contains exhaustive guidance + edge cases.
    What if my employer pays me ABOVE the AMAP rate?+
    The excess above AMAP rate is treated as taxable + NI-able pay. The employer must report it via P11D (for non-payrolled benefits) or process through payroll (if benefits payrolled). Example: 5,000 business miles at employer-paid 65p/mile = £3,250 reimbursement. AMAP-equivalent at 55p × 5,000 = £2,750. Excess: £500 taxable + NI-able. The excess increases payroll cost + reduces the relief efficiency. Most employers stop at AMAP for simplicity, the 55p/mile (from April 2026) is generally enough to cover most employees' real-world vehicle running costs. If higher rates are needed for unusual circumstances, document the commercial reason + accept the additional tax/NI cost.

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