The recent deadline for self-assessment tax submissions has passed, prompting HMRC to review taxpayers’ tax returns for accuracy and timeliness.
However, it is evident that HMRC should heed its own advice and revise its outdated mileage rates, which have remained unchanged for 15 years. During this period, the cost of living has significantly increased, impacting expenses like food, energy, rent, mortgages, and car maintenance. Many individuals who depend on their vehicles for work are facing unavoidable rising costs.
Since 2010, petrol prices have surged by 15%, car insurance costs have soared by 56%, road tax has increased by 39%, and repair and maintenance expenses have gone up by 40%. In contrast, HMRC’s mileage rate has stagnated, creating a financial burden for working individuals, including the self-employed and employees reimbursed for mileage by their employers.
This situation effectively leads to workers subsidizing their job-related expenses, pushing their real wages below the National Living Wage and exacerbating the cost-of-living crisis. It amounts to a hidden tax on those abiding by the rules, resulting in significant financial losses for many individuals.
Recognizing this disparity, health unions have secured fairer mileage reimbursement rates for NHS staff, such as community midwives and occupational therapists, currently at 56p per mile compared to HMRC’s rate of 45p. They continue to advocate for rates that accurately reflect the actual cost of vehicle operation.
Outside the NHS, workers like home care staff face an even more challenging situation. Despite earning around the National Living Wage, they receive reimbursements that are approximately a quarter less than NHS staff and significantly below the true cost of driving.
Research by Unison and the RAC Foundation indicates that the actual cost of work-related driving is closer to 67p per mile. While HMRC suggests that taxpayers can calculate their expenses, the majority of employers rely on the official rate, causing millions to lose out on rightful reimbursements.
For over a decade, the Conservative party allowed this injustice to persist. Working individuals are not seeking preferential treatment but fairness in reimbursement practices.
As the party representing the interests of working people, Labour is urging the Government to direct HMRC to update the mileage rate promptly, demonstrating support for the workforce.
