Income Tax (Earnings and Pensions) Act 2003 section 230

The approved amount for mileage allowance payments

Section 230 sets out how to calculate the approved amount for mileage allowance payments, which determines the maximum amount an employer can pay tax-free to an employee who uses their own vehicle for business travel.

• The approved amount is calculated by multiplying business miles driven (M) by the applicable rate per mile (R), giving the formula M × R for each kind of vehicle.
• The approved rates are 45p per mile for the first 10,000 business miles by car or van (25p thereafter), 24p per mile for motorcycles, and 20p per mile for cycles.
• The 10,000-mile threshold applies across the current employment and any associated employments combined, where employments are associated if they share the same employer, are under common control, or involve associated companies.
• The Treasury has the power to amend the rates or rate bands by issuing regulations.