The recent deadline for self-assessment tax filings has come and gone, prompting HMRC to diligently review tax returns for accuracy and timeliness. However, it is now imperative for the tax authority to heed its own counsel and revise outdated mileage rates. These rates have remained stagnant for 15 years, falling out of sync with the current economic landscape marked by escalating living costs. Essential expenses like food, energy, rent, and mortgages have surged, along with the expenses associated with car ownership, affecting millions who rely on their vehicles for work.
Over the past decade, petrol prices have climbed by 15%, car insurance by 56%, road tax by 39%, and repairs and maintenance by 40%. Meanwhile, HMRC’s mileage rate has remained unchanged, placing a direct financial burden on working individuals. This issue extends beyond the self-employed to employees reimbursed for mileage by their employers.
Workers vital to our economic engine are essentially bearing the cost of performing their duties, pushing their real wages below the National Living Wage and deeper into the throes of the cost-of-living crisis. This situation amounts to an indirect tax on those abiding by regulations, often leaving them substantially out of pocket.
Recognizing this disparity, health unions have successfully secured fairer reimbursement rates for NHS staff like community midwives and occupational therapists, currently set at 56p per mile compared to HMRC’s 45p rate. They continue to advocate for rates that accurately reflect the true expenses of vehicle operation.
For non-NHS workers such as home care staff, the situation is more dire. Despite earning at or slightly above the National Living Wage, they receive reimbursements approximately a quarter less than NHS employees and around a third less than the actual cost of driving.
Studies conducted by Unison and the RAC Foundation reveal that the genuine cost of work-related driving now hovers around 67p per mile. While HMRC suggests taxpayers calculate their expenses, the overwhelming majority of employers rely on the official rate, leading to significant financial losses for millions.
For 14 years, the Conservative party allowed this inequity to persist. Working individuals are not seeking preferential treatment, merely fairness.
As the party championing the rights of workers, Labour calls on the Government to direct HMRC to update the mileage rate, demonstrating solidarity with working people.