The recent deadline for self-assessment taxes has come and gone, with HMRC now focusing on verifying that taxpayers have submitted their tax returns accurately and on time.
It is now long overdue for the tax office to review and update its outdated mileage rates, which have remained unchanged for 15 years. During this period, the cost of living has significantly increased, affecting various essential expenses such as food, energy, rent, and mortgages, as well as the expenses associated with running a car. This freeze in mileage rates directly impacts millions of individuals who rely on their vehicles for work.
Since 2010, petrol prices have gone up by 15%, car insurance costs have risen by 56%, road tax has increased by 39%, and repairs and maintenance expenses have surged by 40%. Despite these escalating costs, HMRC’s mileage rate has remained stagnant, creating a financial burden for working individuals. This issue extends beyond the self-employed and also affects employees who receive mileage reimbursements from their employers.
Workers who contribute to the economy are essentially bearing the costs of doing their jobs, leading to their real wages falling below the National Living Wage and exacerbating the overall cost-of-living challenges. This situation amounts to an implicit tax on those who are diligently complying with regulations, often resulting in significant financial losses for working individuals.
Acknowledging this disparity, health unions have successfully negotiated fairer reimbursement rates for NHS staff like community midwives and occupational therapists, currently set at 56p per mile compared to HMRC’s rate of 45p. They are actively advocating for rates that accurately reflect the true expenses of operating a vehicle.
For non-NHS workers, such as home care staff, the situation is even more dire. Despite earning wages at or slightly above the National Living Wage, they receive reimbursements that are approximately a quarter less than NHS staff and nearly a third less than the actual cost of driving.
Research conducted by Unison and the RAC Foundation indicates that the genuine cost of work-related driving now stands closer to 67p per mile. Although HMRC suggests that taxpayers can calculate their own costs, the majority of employers rely on the official rate, resulting in millions of individuals being disadvantaged.
For 14 years, the Conservative government has allowed this unfair situation to persist. Working individuals are not seeking special treatment, but rather fairness in the system.
As the party representing working people, Labour is urging the government to direct HMRC to revise the mileage rate, demonstrating support for working individuals.