Rates and Allowances - Travel
Approved mileage rates
| From 2002/03 | First 10,000 business miles in the tax year | Each business mile over 10,000 in the tax year |
| Cars and vans | 40p | 25p |
| Motor cycles | 24p | 24p |
| Bicycles | 20p | 20p |
Passenger payments - cars and vans
5p per passenger per business mile for carrying fellow employees in a car or van on journeys which are also work journeys for them. Only payments specifically for carrying passengers count and there is no relief if you receive less, or nothing at all.
Company Cars
The charge is based on the price of the car for tax purposes (normally the list price) and accessories multiplied by an appropriate percentage based on the level of CO2 emissions and the fuel the car uses. There is a ready-reckoner of appropriate percentages for petrol-powered cars and summaries of adjustments to those percentages for years from 2002/03 to 2005/06 and for years from 2006/07 onwards.
Company Vans
The rules on which the charge is based were changed from 2005/06. The charges are:
| Type | years to 2006/07 | years from 2007/08 |
| van less than 4 years old at the end of the tax year | £500 | £3,000 |
| all other vans | £350 | £3,000 |
Company Cars - Advisory Fuel Rates for Company Cars from 1 February 2007
These rates apply to all journeys on or after 1 February 2007 until further notice:
| Engine Size | Petrol | Diesel | LPG |
| 1400cc or less | 9p | 9p | 6p |
| 1401cc to 2000cc | 11p | 9p | 7p |
| Over 2000cc | 16p | 12p | 10p |
Petrol hybrid cars are treated as petrol cars for this purpose.
Where employers have practical difficulties implementing the new lower rates they can continue to use the older higher rates for a further month, i.e. to 28 February 2007, without having to take account of the income tax, NIC and VAT implications of paying allowances at the higher rate. This will allow time for drivers and employers to adjust to the new rate.
This treatment will extend to those employers with dispensations for fuel rates which are linked, usually by a formula, to AFRs.
Employers can however use the new lower rate with effect from 1 February for employees with fuel cards who reimburse their employers for private fuel bought with a company fuel card.
These rates are calculated from the fuel prices in the table below:
| Fuel | Engine Size (cc) | Mean MPG | Applied MPG | Fuel price (per litre) | Fuel price (per gallon) | Pence per mile | AFR |
| Petrol | up to 1400 | 46.7 | 42.0 | 86.3 | 392.2 | 9.3 | 9 |
| Petrol | 1400 - 2000 | 38.5 | 34.7 | 86.3 | 392.2 | 11.3 | 11 |
| Petrol | over 2000 | 27.9 | 25.1 | 86.3 | 392.2 | 15.6 | 16 |
| Diesel | up to 2000 | 50.3 | 45.3 | 90.5 | 411.2 | 9.1 | 9 |
| Diesel | Over 2000 | 37.5 | 33.7 | 90.5 | 411.2 | 12.2 | 12 |
| LPG | up to 1400 | 37.4 | 33.6 | 45.5 | 206.9 | 6.2 | 6 |
| LPG | 1400 - 2000 | 30.8 | 27.7 | 45.5 | 206.9 | 7.5 | 7 |
| LPG | over 2000 | 22.3 | 20.1 | 45.5 | 206.9 | 10.3 | 10 |
Notes:
- Mean mpg - miles per gallon - from manufacturers information, weighted by annual sales to businesses (Society of Motor Manufacturers and Traders (SMMT), 2005).
- Applied mpg - adjusted downwards by 10% to take account of real driving conditions and lower fuel economy for older cars
- For LPG, mpg is assumed to be 20% lower than for petrol due to lower volumetric energy density
- Department of Trade & Industry's latest petrol and diesel prices (January 2007), LPG from AA website (January 2007).
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