What’s the Difference Between AFR and AMAP?
31/12/2021
Background
When you use your car for business travel, you are entitled to claim back your ‘mileage’ so that you are not out of pocket for doing your job. The rules behind what you can claim differ based on the ownership of the car, as company cars are treated differently to privately owned cars. The rules governing this are based around AFR (Advisory Fuel Rates) and AMAP (Approved Mileage Allowance Payments) AMAP being used for private cars, AFR for company cars.
Privately Owned Cars
The rules for private cars are governed by AMAP and are relatively simple – you can claim 45p per mile (up to 10,000 miles) and then 25p a mile for mileages over that. These figures have been the same for quite a while, and the amount is designed to cover insurance, wear and tear, fuel etc. It doesn’t matter what type of car you use (petrol, diesel, hybrid or electric), and it doesn’t matter if you use multiple cars during the year – it is a ‘per employee’ allowance.
The 45p per mile is only what you can be paid without incurring any tax charges – if your business decides to pay you £1 a mile that is fine, it is just that any payment over 45p will be taxable (so 55p in that example).
Conversely, if your business only pays 10p per mile, you’d be able to claim tax relief on the difference (usually via a form P87 if you are not on self-assessment).
The AMAP scheme also allows you to claim a little extra if you have passengers – it’s an additional 5p per mile, per passenger.
Company Cars
Where a company car does not have fuel provided (if you have ‘free fuel’ you’d be paying the Fuel Scale Charge) and you are paying for the fuel, you can again claim without incurring a tax burden. With a company car the amount you can claim is based on AFR (Advisory Fuel Rates), and varies depending on the fuel type and CC of the car (or just fuel type if it is a fully electric car. The intention is that these rates ‘just’ cover the cost of the fuel, so the rates are updated quarterly by HMRC to try and keep them ‘in sync’ with fuel prices.
It is fairly odd that cubic capacity and fuel type are still used by HMRC (CO2 tends to be the driving force elsewhere), but that is current legislation. This means that mileage needs to be ‘tied’ to the car to allow the P11D Organiser to calculate the correct figure for the correct period.
Again, if the business decides to pay a higher (or lower) amount, then the tax implications need to be considered.
P11D Reporting
If the business does pay more than the HMRC agreed rates, then the ‘extra’ will need to be reported on a P11D under Section E – Mileage allowance payments not taxed at source.
If your business pays less, then they may want to provide the employee the figures to allow them to progress a tax relief claim, either via self-assessment or form P87.
HMRC Links
These are the links to to Gov.UK pages related to AMAP and AFR: