The recent deadline for self-assessment tax submissions has come and gone, prompting the HMRC to verify that taxpayers have filed their tax returns accurately and promptly.
While this scrutiny is understandable, there is a growing call for the tax authorities to review and update their outdated mileage rates, which have remained unchanged for 15 years. During this time, living expenses have significantly increased, encompassing rising costs of food, energy, rent, and mortgages, along with the expenses associated with car usage. Many individuals rely on their vehicles for work, making these escalating costs unavoidable.
Since 2010, petrol prices have surged by 15%, car insurance costs have spiked by 56%, road tax has climbed by 39%, and maintenance expenses have risen by 40%. In contrast, HMRC’s mileage rate has remained stagnant, adversely affecting both the self-employed and employees who receive mileage reimbursement from their employers.
This discrepancy effectively burdens hardworking individuals who are essential to sustaining the economy, pushing their real wages below the National Living Wage and exacerbating the cost-of-living crisis. This situation amounts to a concealed tax on those abiding by the rules, often leaving them financially strained by thousands of pounds.
Recognizing this disparity, health unions have advocated for fairer reimbursement rates for specific groups, such as NHS staff, like community midwives and occupational therapists, who currently receive 56p per mile compared to the HMRC rate of 45p. They continue to campaign for rates that accurately reflect the actual expenses of operating a vehicle.
For workers outside the NHS, such as home care staff, the situation is even more dire. Despite earning wages at or slightly above the National Living Wage, they are reimbursed approximately 25% less than NHS staff and about 33% less than the true cost of driving.
Research conducted by Unison and the RAC Foundation indicates that the genuine cost of work-related driving is closer to 67p per mile. While HMRC suggests that taxpayers calculate their own expenses, the majority of employers rely on the official rate, resulting in significant losses for millions of individuals.
For over a decade, the Conservative government has allowed this inequity to persist. The request from working people is not for preferential treatment but for fairness.
Labour, as the party representing the interests of working individuals, is urging the government to direct HMRC to revise the mileage rate, demonstrating support for those who contribute to the workforce.