The recent deadline for self-assessment tax filings has come and gone, prompting HMRC to diligently review submitted tax returns for accuracy and timeliness. While this scrutiny is warranted, there is a growing call for HMRC to update its outdated mileage rates, which have remained unchanged for 15 years despite the escalating cost of living.
During this period, essential expenses such as food, energy, rent, and mortgages have all surged, including the expenses associated with operating a vehicle. Petrol prices have climbed by 15% since 2010, car insurance costs have spiked by 56%, road tax has increased by 39%, and repair and maintenance expenses have risen by 40%. However, HMRC’s mileage rate has stagnated, placing a financial burden on individuals who rely on their vehicles for work.
This issue impacts not only the self-employed but also employees who receive mileage reimbursements from their employers. The discrepancy between the actual costs of driving and the HMRC mileage rate is effectively eroding real wages, pushing them below the National Living Wage and exacerbating the cost-of-living crisis for hardworking individuals.
Recognizing this disparity, health unions have successfully negotiated fairer reimbursement rates for certain NHS staff, such as community midwives and occupational therapists, who currently receive 56p per mile compared to HMRC’s rate of 45p. The push for mileage rates that accurately reflect the true cost of vehicle operation continues.
For workers outside the NHS, like home care staff, the situation is even more dire. Despite earning wages at or slightly above the National Living Wage, they are reimbursed at rates significantly lower than NHS employees, falling short of covering the actual expenses incurred while driving.
Research conducted by Unison and the RAC Foundation indicates that the true cost of driving for work is closer to 67p per mile. While HMRC suggests that taxpayers calculate their own costs, the majority of employers rely on the official rate, resulting in millions of workers being financially disadvantaged.
For over a decade, the issue of outdated mileage rates persisted under the Conservative government. Working individuals are not seeking preferential treatment but rather fair compensation for their essential work. As the party advocating for the interests of workers, Labour is urging the government to direct HMRC to revise the mileage rate, demonstrating support for working individuals and addressing this long-standing discrepancy.