The recent deadline for self-assessment tax submissions has passed, prompting HMRC to review the accuracy and timeliness of tax returns. While this scrutiny is warranted, there is growing concern over the outdated mileage rates set by HMRC, which have remained unchanged for 15 years despite significant increases in the cost of living.
During this period, essential expenses such as food, energy, rent, and mortgages have all surged, along with the expenses associated with owning and operating a vehicle. The stagnation of HMRC’s mileage rate has imposed a financial burden on individuals who heavily rely on their vehicles for work, impacting both self-employed individuals and employees reimbursed for mileage by their employers.
The continuous rise in petrol prices by 15%, car insurance by 56%, road tax by 39%, and repairs and maintenance by 40% contrasts sharply with the static HMRC mileage rate. This disparity effectively results in individuals subsidizing their work-related travel expenses, pushing their real wages below the National Living Wage and exacerbating the overall cost-of-living challenges.
Recognizing this issue, health unions have successfully negotiated fairer reimbursement rates for NHS staff, emphasizing the need for rates that accurately reflect the genuine cost of using a car for work purposes. However, for workers outside the NHS, such as home care staff, the discrepancy in reimbursement rates is even more pronounced, with many earning just above the National Living Wage but receiving significantly lower mileage reimbursements.
Research conducted by Unison and the RAC Foundation reveals that the actual cost of driving for work is closer to 67p per mile, significantly higher than the current HMRC rate of 45p. Despite HMRC suggesting that taxpayers calculate their individual costs, the reliance of nine out of ten employers on the official rate results in millions of individuals being shortchanged.
For over a decade, the issue of outdated mileage rates has persisted under Conservative governance. Working individuals are not seeking preferential treatment but rather fair and equitable reimbursement practices. As the party representing the interests of the working class, Labour is calling on the Government to direct HMRC to revise the mileage rate promptly, demonstrating its commitment to supporting working individuals.