Introduction
Pressure is mounting on HM Revenue and Customs (HMRC) to update the official business mileage rate, following criticism from politicians and unions that the rate has remained unchanged for over a decade.
With the cost of living and motoring expenses rising sharply, many of the UK's frontline and low-paid workers including NHS and care staff are reportedly left out of pocket when using their own vehicles for work. The current system, critics argue, risks eroding real incomes and contributing to broader workforce challenges across the public and private sectors.
Current HMRC Mileage Rates
The HMRC approved mileage allowance payment for employees using their own cars for business purposes has been fixed at 45p per mile for the first 10,000 miles, and 25p per mile thereafter, since 2011.
This rate is designed to cover the cost of fuel, vehicle maintenance and depreciation. Employers can reimburse staff at this rate without triggering additional tax liabilities, and it also sets the threshold for tax relief on business mileage expenses.
Rising Costs Impacting Workers
Since HMRC last updated the mileage rate, costs associated with running a vehicle have increased significantly. According to the Office for National Statistics and recent motoring organisation reports, petrol prices have risen by approximately 15%, car insurance premiums are up by more than 50%, and road tax and maintenance costs have also seen substantial increases. These rises have outpaced wage growth, particularly affecting those who rely on private vehicles for their employment.
NHS Staff and Reimbursement Rates
While the statutory mileage rate remains at 45p, some NHS staff receive higher reimbursement rates following successful negotiations by health unions. The official NHS Agenda for Change rate currently stands at 56p per mile for eligible staff, such as community nurses and occupational therapists.
Unions continue to campaign for further increases, stating that even this higher rate does not fully reflect the real cost of motoring, especially amid persistent inflation.
Pressures on Non-NHS Workers
Care professionals, charity workers, and other staff outside the NHS often receive mileage payments at or near the HMRC rate. Many of these workers earn just above the National Living Wage and have reported being reimbursed up to a quarter less than their NHS counterparts, despite facing similar travel costs.
This situation has prompted claims that the current system effectively lowers the real value of their take-home pay, exacerbating recruitment and retention issues in essential sectors.
Research on True Cost of Driving
Independent analysis conducted by Unison and the RAC Foundation estimates that the actual cost of using a personal vehicle for business travel is now closer to 67p per mile. Despite this, over 90% of employers continue to use the HMRC rate when reimbursing staff, which unions argue leaves millions of workers absorbing the gap between reimbursement and reality. Unison has reiterated its call for an urgent review to ensure rates meet present-day costs.
Final Summary
Calls for a review of HMRC's business mileage allowance continue to intensify, as unions, workers, and politicians highlight the growing gulf between reimbursement rates and the real cost of motoring. With inflation and increased motoring expenses placing additional strain on workers across frontline sectors, campaigners argue that updating the mileage rate is essential to ensuring fairness and maintaining crucial public services.
The debate is likely to continue as stakeholders push for changes that would better align policy with economic realities. For those seeking to track policy updates and workplace rights, tools such as the Pie app can provide ongoing insights into tax and employment developments.
