Ahead of annual fiscal events like the Budget, interested parties are invited to submit representations asking for changes to the tax system. In advance of the Autumn Budget on 30 October 2024, the ATT has made representations in two areas of particular interest to employers and employees – mileage allowances and the trivial benefits rules.

Mileage allowances

Where an employee uses their own car for business travel, they can be reimbursed tax free by their employer provided the amount paid does not exceed HMRC’s Approved Mileage Allowance Payments (AMAPs).

The AMAP rate depends on the vehicle used and the business miles travelled.  For cars or vans, the main rate is 45p/mile for the first 10,000 miles and 25p/mile thereafter.

The main 45p/mile AMAP rate has not changed in over 13 years, during which time the cost of running a car has increased significantly. If the rates had increased with inflation, the 45p/mile rate introduced in 2011 would currently be worth 64p/mile.

As a result, many employees are no longer being reimbursed enough to cover the true cost of business travel. If an employer chooses to pay more than the AMAP rates, this results in not just tax for them and their employee, but also additional administration.

In our Budget Representation we recommend that the AMAP rates should be increased to better reflect the current cost of running a car. They should then be reviewed and updated on an annual basis.

Trivial benefits

The trivial benefits rules allow employers to provide small benefits costing less than £50 to their employees tax free, provided certain conditions are met. One of these conditions is that the benefit is not cash, or a voucher which can be exchanged for cash.

This can cause problems in practice, as the same benefit can have a different tax treatment depending on exactly how an employer pays for it.  For example, HMRC accept that giving an employee a voucher for a flu vaccination can qualify as a tax free trivial benefit. However, if the employee pays for their vaccination themselves and is then reimbursed, that will not qualify as a trivial benefit as the employee is deemed to have received cash.

In our Budget Representation, we argue that, where all the other conditions are met, a benefit should qualify for relief as a trivial benefit regardless of whether it is paid for directly by the employer or an employee is reimbursed.

We also recommend that the £50 limit, which has not changed since it was first introduced in 2016, should be increased, preferably in line with inflation.

This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.  

We regularly publish articles on a range of tax and wider topical issues which affect employers. If you wish to subscribe to our monthly Employer Focus e-newsletter, please contact us.