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<p>Approved Mileage Allowance Payments (AMAPs) are used by employers to reimburse
an employee’s expenses for business mileage in their private vehicle.</p><p> </p><p>The
government sets the AMAP rates to minimise administrative burdens. The AMAP rates
aim to reflect running costs including fuel, servicing and depreciation. Depreciation
is estimated to constitute the most significant proportion of the AMAP rates.</p><p>
</p><p> </p><p>Employers are not required to use the AMAPs rates. Instead, they can
agree to reimburse a different amount that better reflects their employees’ circumstances.
If an employee is paid less than the AMAP rate, they can claim Mileage Allowance Relief
(MAR) on the shortfall. However, where payments exceed the relevant AMAP rate, there
will be a tax and National Insurance charge on the difference.</p><p> </p><p>Like
all taxes and allowances, the Government keeps the AMAP rate under review.</p><p>
</p><p>The Government also sets out Advisory Fuel Rates (AFR) for company car users.
These rates reflect average miles per gallon (MPG) for vehicle types from manufacturers’
information, taking into account annual sales to businesses, combined with petrol
and diesel prices.</p><p> </p><p>AFRs are not mandatory, and employers and employees
can agree to use different rates to reflect scenarios in which a car is more fuel
efficient or where the fuel cost per mile of business travel is higher. Where an employer
pays a rate higher than the published AFRs, no tax charge will arise if the employee
is able to demonstrate there is no profit element.</p><p> </p><p>The AFRs are reviewed
by HMRC on a quarterly basis.</p>
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