The recent deadline for self-assessment tax filings has come and gone, with HMRC now in the process of reviewing taxpayers’ submissions for accuracy and punctuality.
While this scrutiny is understandable, it is high time for the tax authority to heed its own advice and revise its outdated mileage reimbursement rates. These rates have remained stagnant for 15 years, failing to keep pace with the significant rise in living expenses. Essential costs such as food, energy, rent, and mortgages have all surged in recent years, as has the cost of operating a vehicle. Many individuals rely on their cars for work, and these escalating expenses are unavoidable.
Since 2010, petrol prices have climbed by 15%, car insurance costs have soared by 56%, road tax has increased by 39%, and maintenance expenses have surged by 40%. In stark contrast, HMRC’s mileage rate has remained unchanged, directly burdening working individuals. This issue impacts not only the self-employed but also employees who receive mileage reimbursements from their employers.
The individuals who sustain our economy are essentially bearing the financial burden of their jobs, driving their real wages below the National Living Wage and deeper into a cost-of-living crisis. This situation amounts to a hidden tax on those who are diligently following the rules, often leaving them thousands of pounds worse off.
Recognizing this disparity, health unions have successfully negotiated higher reimbursement rates for NHS staff, like community midwives and occupational therapists, currently set at 56p per mile compared to HMRC’s rate of 45p. These unions are rightfully advocating for rates that accurately reflect the true cost of car ownership.
For workers outside the NHS, such as home care providers, the situation is even bleaker. Many of these individuals earn just at or slightly above the National Living Wage yet receive reimbursements that are significantly lower than those for NHS staff and fall short of covering the actual cost of driving.
Research conducted by Unison and the RAC Foundation indicates that the genuine cost of work-related driving now hovers around 67p per mile. While HMRC suggests taxpayers calculate their own expenses, the majority of employers rely on the official rate, resulting in millions losing out on rightful reimbursements.
For over a decade, the Conservative party allowed this unfair practice to persist. Working individuals are not seeking preferential treatment, only fairness.
As the party that champions the interests of the working class, Labour is calling on the Government to direct HMRC to promptly update the mileage rate, demonstrating its commitment to supporting working people.
