Major Review of UK Mileage Rates Could Benefit Millions of Drivers
Millions of drivers across the United Kingdom may soon be eligible to claim higher mileage expenses, as the government initiates a comprehensive "workers-first" review of the current rates. Treasury minister Dan Tomlinson has openly acknowledged that this review is "well overdue," highlighting that the mileage allowance has remained stagnant since 2011, thereby increasing the financial burden on working individuals.
Government Acknowledges Long-Standing Issue
Chancellor Rachel Reeves announced the review earlier this month, with the Treasury providing additional details on the process. The government plans to consult directly with workers who are grappling with escalating motoring costs, ensuring their voices are heard in the decision-making process.
Exchequer Secretary Dan Tomlinson emphasised the critical role of personal vehicles in the workforce, stating: "Millions of working people rely on their car to do their job. But mileage rates have been unchanged since 2011 and that's increased the cost of working. A review is well overdue." He also noted that maintaining low fuel prices is a key strategy in alleviating the cost of living, which is why fuel duty has been frozen.
Current Mileage Allowance Structure
The approved mileage allowance payment (AMAP) system determines how much employees can be reimbursed tax-free for using their personal vehicles for work-related purposes. Under the current framework:
- Drivers can claim 45p per mile tax-free for the first 10,000 miles, intended to cover vehicle running costs such as insurance and servicing.
- After exceeding 10,000 miles, the rate drops to 25p per mile.
- An additional 5p per mile can be claimed for each passenger transported during work journeys.
Officials have clarified that the "workers-first review" will specifically focus on individuals who depend on their cars to perform their job duties. Any adjustments to the mileage rates will be formally announced in a future budget.
Support from Unions and Industry
Unison general secretary Andrea Egan welcomed the review, describing it as "long overdue." She pointed out that many workers have suffered financially due to the frozen rates, particularly those in essential public services who use their own cars for work. "For people providing essential public services who need their own cars for work, that's left them thousands of pounds out of pocket," Egan stated. She added that it is encouraging to see the Chancellor taking steps in the right direction, especially as household bills continue to rise.
Context of Rising Fuel Prices
The government's review comes amid mounting pressure to support motorists as fuel prices surge, largely driven by the oil and gas crisis triggered by the conflict in Iran. According to the RAC, diesel prices have increased by nearly a quarter since the onset of the Middle East conflict, with the average price per litre reaching 175.7p on Wednesday, up 23% from February 28. Petrol prices have also risen by 13%, from 132.8p to 149.4p per litre.
In response, the Conservative Party has intensified its campaign urging Chancellor Rachel Reeves to cancel a scheduled increase in fuel duty set for September. This political backdrop underscores the urgency of addressing motoring costs through measures like the mileage rate review.
The outcome of this review could have significant implications for millions of UK drivers, potentially easing the financial strain associated with work-related travel and reflecting broader efforts to tackle the cost of living crisis.
