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An increase to mileage allowances for privately owned cars may not be forthcoming, despite the recent dramatic rise in fuel prices.
Veteran tax writer Ray Chidell, author of P11D: Tax-Efficient Benefits and Expenses and co-author of Company Cars: Practical Tax Planning, has warned that there are factors other than the cost of petrol (and diesel) that dictate reimbursements for motorists using their own vehicles for business.
It could be argued, he said, that in the past six years since the rate was frozen at 40p per mile for the first 10,000 business miles (and 25p thereafter), the general costs of a car, such repairs and fuel efficiency, have decreased.
As a result, 'the rates wouldn't be updated in line with fuel cost', added Mr Chidell.
His point was backed this week by HMRC in minutes from a meeting of the benefits and expenses sub-group.
On the point of the approved mileage allowance payment (AMAP) scheme, it was noted that they 'are not meant to reflect the actual costs of running a car, as one rate cannot cover all the different aspects of using a private car for business journeys, but are set at a rate that the Government considers a reasonable reimbursement for driving on business'.
Also this week, community nurses became the latest prominent body of workers to call for higher AMAP.
In support of the nurses' demands, the tax principal at MacIntyre Hudson, Nigel May, said it was 'difficult to justify the failure of the Government to make this comparatively easy step and increase the payments that may be made by employers free from tax.
'AMAP cannot be seen as anything other than a stealth tax: one which affects 60,000 of this country's key workers.'
Current factors might suggest that company cars are a more economical option over privately owned vehicles.
Ray Chidell agreed that in some cases 'shift the balance back to company cars, partly because drivers are reimbursed at 'a fairly realistic rate', while an owner of a modest family car who covers a lot a miles for work will 'lose out' because of potentially prohibitive fuel prices.
However, he added that there was no 'simplistic rule of thumb' when arguing in favour of one type of vehicle or the other.
