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Revenue raises hopes of AMAP rate boost

Date: 08 July 2008   |   Author: Tristan Young

Speculation is mounting that the Pre-Budget statement due later this year will reveal an improvement in AMAP rates, the tax-free amount employers can pay drivers for using their own cars on company business.

Despite the HMRC's position that is not planning to change the AMAP levels, it has said: "AMAPs are a statutory scheme and can therefore only be altered by the Government as part of the Finance Bill and Budget cycle."

Industry experts believe that, while AMAP rates account for more than just fuel, the increase in fuel prices is now so significant it will mean a hike in the official mileage payments.

Last week trade union giant Unison agreed a 10% increase in mileage rates with NHS bosses for staff, such as district nurses, using their own cars for work.

The NHS rates are linked to engine size and also distance, giving a range of new payment levels between 17.8 pence a mile and 58.3ppm.

The highest levels of these rates now fall outside the AMAP rates which means drivers will pay tax on a portion of the payments.

Mike Jackson, Unison's senior national officer for its health group, said: "We have met with the HMRC and were surprised there wasn't anything in the Finance Bill about AMAPs, because fuel costs have risen 40% since they were introduced."

Jackson said that he was expecting a rise in AMAP rates at either the Pre-Budget Report or Budget, but added he had expected rises in the past two Budgets.

Interestingly, last month saw the US equivalent of AMAP rates rise 16% to 58.5 cents a mile. The US rates are set by the Internal Revenue Service, for the second six months of 2008, which cited rising fuel prices for the increase.

The change marks a move away from the normal annual change announced each autumn for the following year.

NHS business mileage rates (regular user)
Engine sizedistanceold ratenew rate
Up to 1000ccup to 9000mls27.0p29.7p
Up to 1000ccover 9000mls16.2p17.8p
1001cc to 1500ccup to 9000mls33.5p36.9p
1001cc to 1500ccover 9000mls18.3p20.1p
Over 1500ccup to 9000mls40.0p44.0p
Over 1500ccover 9000mls20.5p22.6p

NHS business mileage rates (standard user)
Engine sizedistanceold ratenew rate
Up to 1000ccup to 3500mls34.0p37.4p
Up to 1000ccover 3500mls16.2p17.8p
1001cc to 1500ccup to 3500mls43.0p47.3p
1001cc to 1500ccover 3500mls18.3p20.1p
Over 1500ccup to 3500mls53.0p58.3p
Over 1500ccover 3500mls20.5p22.6p