Tax expert urges HMRC to increase mileage rate for drivers

Under the current scheme, employees travelling on business using their own vehicle can be reimbursed 45p per mile on the first 10,000 miles and 25p per mile for the remaining miles in a tax year.

The mileage allowance is designed to not only reimburse employees the fuel for using their own cars, but also considers other factors including road tax, repairs, and servicing/MOTs.

With the substantial increase in fuel prices over the past year, Dave Hedges, tax partner at Azets, which has offices in Fareham and Havant, says increasing the allowance will relieve some financial burden.

Mr Hedges said: ‘The energy price cap has risen and a reduction in oil prices has yet to be fully felt at the pumps. This, as well as a rise in almost every other bill, has led to millions of households struggling to cope.

‘World events beyond our control have exasperated the situation and impacted supply chains, which has subsequently resulted in higher prices. We have seen a slight reduction in prices in recent weeks – but still only marginally down from historic highs.

‘This could take years to stabilise – and an updated mileage rate model is required to ensure that it accurately reflects the dynamic market.’

The current 45p per mile rate was introduced in 2011 when petrol was an average of 133.65p per litre and diesel was 138.94p.

In 2022, motorists recently faced an average of 173.46p per litre for petrol and 184.21p per litre for diesel.