The government has made the announcement that there will be a review of mileage rates and that those who claim motoring expenses could be set to benefit.
And while this decision has been welcomed, there are concerns that this move doesn’t go far enough, especially considering that the Approved Mileage Allowance Payments (AMAPs) have remained at the same rate for the last 15 years.
Mileage fuel rates and allowances
These are the current approved mileage rates:
| Vehicle | First 10,000 business miles in the tax year | Each business mile over 10,000 in the tax year |
| Cars and Vans | 45p | 25p |
| Motor Cycles | 24p | 24p |
| Bicycles | 20p | 20p |
Motoring costs have increased significantly
The Association of Taxation Technicians (ATT) says that 15 years of frozen rates mean many of those who use their own cars for work have been left out of pocket, or even paying for their own work travel.
Recent data shows that motoring costs have increased by almost 60% over the last 10 years – this includes a 220% rise in tax and insurance costs.
The 45p rate would need to be approximately 67p in 2026 to keep pace with inflation (based on the Bank of England inflation calculator).
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The ATT believes that while a review is a positive move, it’s not being treated with enough urgency.
Jon Stride, chair of the ATT’s Technical Steering Group, explained, “It’s disappointing that the government is only committing to a review ahead of a future Budget. We would like to see much more urgency. This long overdue review alone won’t help those workers who have already been out of pocket for years due to outdated mileage rates.
“These rates have not changed since 2011, despite a dramatic increase in the real cost of motoring. In real terms, the current 45p rate is now worth closer to 67p. That gap represents a significant cost for employees who rely on their vehicles for work.
“Mileage rates are just one example of a wider problem that needs urgent attention. Other exemptions and reliefs have not kept track with inflation and need to be reviewed, including those for annual work parties, tax free trivial benefits for employees and the amount employers can pay employees tax free for working from home.”
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