Introduction to this document

Employees using their own cars for business policy

If employees use their own vehicles for business journeys, you should have a company policy which spells out the situation regarding insurance, parking and mileage rates at which you will reimburse them.

Tax-free mileage

You can pay any reasonable amount to an employee as compensation for using their own car for business journeys (ordinary commuting does not count as a business journey). The most tax and NI-efficient way to do this is as a mileage allowance. HMRC allows employers to pay 45p tax free for the first 10,000 business miles and 25p thereafter. The rate for NI is 45p for all mileage. HMRC refers to these as approved mileage rate allowance payments (AMAPs)

Use our Employees Using Their Own Cars for Business Policy to formalise the payment of mileage allowances for business use.