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AMAP cut likely, claims BVRLA

Date: 05 November 2007   |   Author: Rupert Saunders

John Lewis, BVRLA

The Government is considering reducing the compensation paid to drivers who use their own cars for company use by lowering the mileage thresholds, according to John Lewis, director general of the BVRLA.

Lewis, who has worked closely with the Treasury and HMRC during a long running review of Approved Mileage (AMAP) payments, predicted the basic rate of 40p a mile would remain in place, but only for the first 5000 business miles each year. After that the rate will fall to 20p a mile.

The current AMAP rates are 40p a mile for the first 10,000 mile and then 25p a mile after that.

Lewis, speaking to representatives of the major leasing companies at a CAP Focus seminar, said: "The Government's aim is to cut the compensation available so that higher mileage drivers would be encouraged to use a smaller car."

Lowering the mileage threshold, but leaving the basic rate untouched, would also have the advantage of maintaining compensation rates to lower mileage drivers, such as local government and public sector workers - many of whom use their own cars for occasional business use.

Lewis criticised the Government for not announcing the new AMAP rates in the recent Pre-Budget Report and said repeated changes in tax strategy were in danger of "destabilising fleet policy". He said it was vital that business car users had a clear idea of what the Government considered a high polluting car.

"We are working in an incredibly difficult market place," he said. "What we have to know is: at what point do we have a high polluting car. Is it more than 225g/km CO2, as defined by VED, or is it more than 165g/km CO2, as defined by the corporation tax proposals?"

The Treasury said it would not comment on speculation about AMAP rates.