Rates per kilometre, which may be used in determining the allowable deduction for business travel against an allowance or advance where actual costs are not claimed, are determined using the table published on this website under Legal Counsel / Secondary Legislation / Income Tax Notices / Fixing of rate per kilometre in respect of motor vehicles.
80% of the travelling allowance must be included in the employee’s remuneration for the purposes of calculating PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the motor vehicle for the tax year will be for business purposes.
No fuel cost may be claimed if the employee has not borne the full cost of fuel used in the vehicle and no maintenance cost may be claimed if the employee has not borne the full cost of maintaining the vehicle (e.g. if the vehicle is covered by a maintenance plan).
The fixed cost must be reduced on a pro-rata basis if the vehicle is used for business purposes for less than a full year.
The actual distance travelled during a tax year and the distance travelled for business purposes substantiated by a log book are used to determine the costs which may be claimed against a travelling allowance.
Where an allowance or advance is based on the actual distance travelled by the employee for business purposes,
no tax is payable on an allowance paid by an employer to an employee, up to the rate published on this website
under Legal Counsel / Secondary Legislation / Income Tax Notices / Fixing of rate per kilometre in respect of motor vehicles, regardless of the value of the vehicle. However, this alternative is not available if other compensation in the form of an allowance or reimbursement (other than for parking or toll fees) is received from the employer in respect of the vehicle.
- Fixing of rate per kilometre in respect of motor vehicles – section 8(1)(b)(ii) and (iii). Notice 271 in Government Gazette 43073, relating to the rate per kilometre replaces, with effect from 1 March 2020, Notice 170 that was published after the 2018 Budget.
- More information on Legal Secondary Legislation.