Mileage Allowances

The approved maximum tax and national insurance free mileage allowances for employees using their own cars for business are as follows:

Income Tax and NICs are due when allowances exceed these rates. Employees can claim tax relief on any shortfall.

Rates of up to 5p per mile, per passenger, are also tax and NIC free when paid for the carriage of fellow employees on the same business trip.

These rates supercede the Fixed Profit Car Scheme, details of which we include below.

Fixed Profit Car Scheme

Under the Fixed Profit Car Scheme (FPCS) the maximum tax free mileage allowances for employees using their own cars for business are as follows:

	2001/02		2000/01
	First 4,000 business miles	Business miles over 4,000	First 4,000 business miles	Business miles over 4,000
Engine Capacity
Up to 1000cc	40p	25p	28p	17p
1001cc - 1500cc	40p	25p	35p	20p
1500 - 2000cc	45p	25p	45p	25p
Over 2000cc	63p	36p	63p	36p
Flat rate	42.5p	25p	40p	22.5p

Notes

1. Payments in excess of FPCS rates – excess is taxable. Payments at less than FPCS rates - employees can claim tax relief for shortfall. Employees can also claim tax relief for some of their interest paid on a loan to buy a car used for business.



2. The National Insurance Contributions Office use the FPCS mileage rates for up to 4,000 miles. If the employer's mileage rate is above these rates, there will be a NIC liability on the excess.