No tax charge arises in respect of approved mileage allowance payments made by an employer as payment for the business use of a privately owned qualifying vehicle. Separate mileage rates apply for cars and vans, motor cycles and cycles: see Tax - Key Data ¶3-475 (ITEPA 2003, Pt. 4, Ch. 2). From 6 April 2011, the standard rate for cars and vans is 45p per mile, reducing to 25p per mile for mileage in excess of 10,000 miles per tax year.

Employers are also able to pay a tax-free passenger rate of five pence per mile for each fellow passenger carried by the employee and making the same business trip (see ¶3-480).

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