Originally written by Katerina Nicolova on Small Business
Providing mileage allowance for employees who drive for work has become more popular in recent years. But with HMRC’s many rules, it can be confusing for employers and employees alike how this process works. This article will guide you through the main rules you should be aware of as an employer paying out mileage allowance, as an employee receiving the payments, and as self-employed – claiming deductions.
Mileage allowance for employees
My employees use their private vehicles for travelling for business. Do I have to provide them with mileage allowance payments?
As an employer, you are not obliged to pay a mileage allowance to your employees. However, many choose to reimburse their employees for business mileage, as anything paid under or at the same level of the approved mileage rates from HMRC is not reported to the authority.
Your company can choose to pay the exact amount of mileage allowance as stated by HMRC, less or more than it.
If you pay more per mile than the approved rate, the excess sum will be considered as personal benefits for your employee and they’ll have to pay tax on that amount.
To pay out MAPs (mileage allowance payments), your employees

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