Mileage rates need updating as report shows care workers are being put out of pocket

HMRC are being urged to update mileage rates as data shows that care workers are being left out of pocket by ‘outdated’ rates.

These rates haven’t been updated since 2011 and with the cost of running a car having increased considerably over this time, care workers who have no choice but to use their own vehicles are losing out financially.

Employees can be reimbursed for business travel tax-free – provided that their employer uses HMRC approved rates. For employees using their own car or van, the rates are 45p per mile for the first 10,000 miles, and 25p per mile thereafter.

The Association of Taxation Technicians (ATT) has previously called for mileage rates to be increased, along with other organisations including the Low Incomes Tax Reform Group and Unison, and has made a representation ahead of the upcoming Budget at the end of the month.

It has also called for a ‘two-tier approach’ based on total mileage to be scrapped and instead replaced with a simpler single rate.

ATT President Senga Prior, said, “These rates have been frozen for so long, employees are no longer being reimbursed the true cost of their business travel. The Bank of England’s inflation calculator suggests that 45p in 2011 would be worth 64p by July 2024.

“Effectively, employees doing business mileage on behalf of their employer are out of pocket. This particularly impacts those at the lower end of the wage spectrum, such as care workers, who have no choice but to use their own cars.

“To make things worse, an employer who chooses to pay higher rates to better reflect the current costs of motoring creates a tax cost for themselves and their employee.”

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