As an employer, you are not required to pay employees 45p per mile for business travel; you can set a lower rate if it aligns with your company policy, though it’s advisable to ensure the rate covers reasonable expenses.
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A business can pay their employees any amount per mile that they choose.
If an employee is paid less than 45p per mile, the employee can get tax relief called Mileage Allowance Relief (MAR) on the unused balance of the 45p per mile approved amount.
Payments above the approved 45p per mile may be classed as a benefit, which may need to be reported on a P11D and may be taxed.
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