Income Tax (Earnings and Pensions) Act 2003 section 232

Giving effect to mileage allowance relief

Section 232 sets out how mileage allowance relief is given effect as a deduction from an employee's taxable earnings.

• Mileage allowance relief for a tax year is given as a deduction from the employee's taxable earnings, primarily from earnings taxable in the year they are received
• Where earnings are instead taxable in the year they are remitted to the UK, the relief may be deducted from those remitted earnings, covering both the current and any earlier tax years in which the employee was UK resident
• Relief must be set against earnings taxable on receipt first; the remittance basis deduction applies only to any remaining balance, and no amount of relief may be deducted more than once
• In a split year, where some earnings are "excluded" from the UK tax charge, the allowable deduction is reduced proportionally based on the ratio of non-excluded earnings to total earnings