Income Tax (Earnings and Pensions) Act 2003 section 234

The approved amount for passenger payments

Section 234 sets out how to calculate the tax-free approved amount that an employee can receive for carrying fellow employees as passengers during business travel by car or van.

• The approved amount is calculated by multiplying qualifying business miles (where fellow-employee passengers are carried) by a rate of 5 pence per mile.
• Only miles where the passenger is also an employee undertaking business travel, and for which passenger payments are actually made, count towards the calculation.
• Where two or more qualifying passengers are carried at the same time, the approved amount is worked out separately for each passenger and the results are added together.
• The Treasury has the power to change the 5 pence per mile rate by regulations.