CTG is aware that many charities pay mileage costs for staff and volunteers, using HMRC approved rates. With the spiralling cost of fuel there have been increasing calls for HMRC to review the current thresholds.

This issue was flagged at the recent HMRC Charity Tax Forum and HMRC has now responded:

• “As with all taxes and allowances, the Government keeps Approved Mileage Allowance Payments (AMAPs) rates under review, and the consensus is that the rate still remains generous, especially if one considers vehicles have generally appreciated in value over the past of couple of years.   Depreciation is estimated to constitute the most significant proportion of the AMAP rates.  Fuel costs only contribute to a fraction of AMAP rates and not the total rate. Also, AMAPs are an advisory amount, so naturally the rates will be suitable for some drivers (say those who drive more efficient cars) than others.

• The Government introduced AMAPs as an administrative easement. They are not mandatory and therefore employers can agree to reimburse the actual motoring cost incurred, where individuals can provide evidence of the expenditure, without an Income Tax or National Insurance charge arising.

• If an employee is paid less than the approved amount, they are allowed to claim Mileage Allowance Relief (MAR).  However, where payments exceed the amount due under AMAPs, there will be a tax charge on the difference”.