At long last, the Government has recognised the increased cost of motoring by raising the higher rate of mileage allowance to 45p for the first 10,000 miles. This applies for tax year 2011/12 onwards. The lower rate of 25p still applies for mileage over 10,000.

Other mileage allowances for business passengers, motor cycles and bicycles remain the same at 5p, 24p and 20p respectively.

Please note that where employers pay less than statutory rates, employees can claim tax relief on the difference. However, if employers pay a higher rate then there may be a P11D benefit and a related tax liability.

For detailed advice, call Amber Accounting on 01382 312140.