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Wheels go round – part 1
Key points
- No income tax liability arises on approved mileage allowance payments.
- Drivers can claim tax relief if their employer pays less than the approved amount.
- Employer and employee intention is important when considering the National Insurance treatment of a car allowance.
- Contribution from the employer towards car rental may come within the scope of National Insurance.
The potentially landmark First-tier Tribunal decision in Laing O’Rourke Services Ltd (TC8161) (Laing)concerns whether car allowances are earnings and what disregards are available for National Insurance purposes for business mileage driven by employees.
In 2010 the taxpayer victory in Total People Ltd (TC661) established a principle that car allowances are not necessarily earnings and National Insurance relief is available to staff in the same way as approved mileage allowance payments (AMAPS) relief – previously known as the fixed profit car scheme.
The Court of Appeal upheld that decision and ...
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