Government Launches Review of Mileage Rates Amid Rising Fuel Costs

The UK government is initiating a review of the mileage reimbursement rates for employees who use their personal vehicles for work. Treasury minister Dan Tomlinson described the current rate of 45p per mile, unchanged since 2011, as "well overdue" and acknowledged that this stagnation has contributed to increased costs for workers. Chancellor Rachel Reeves announced the review, which aims to consult with workers facing rising motoring expenses.

The Independent

Under the existing Approved Mileage Allowance Payment (AMAP) scheme, employees can claim 45p per mile tax-free for the first 10,000 miles driven for work purposes. Beyond this threshold, the rate drops to 25p per mile. Additionally, drivers can claim an extra 5p per mile for each passenger transported. The government has indicated that any adjustments to these rates will be revealed in a future budget.

The Independent

The impetus for this review comes amid soaring fuel prices, exacerbated by the ongoing oil and gas crisis linked to the conflict in Iran. The average price of diesel in the UK has surged by nearly 25% since the onset of the US-Israeli bombing campaign against Iran, with petrol prices also rising significantly. As of the latest reports, the average price of diesel reached 175.7p per litre, while petrol prices increased from 132.8p to 149.4p, marking a 13% rise.

The Independent

Tomlinson emphasized the importance of the review, stating, “Millions of working people rely on their car to do their job... Keeping prices down at the pump is an important way we can help people with the cost of living.” Unison general secretary Andrea Egan supported the review, noting that many workers have faced financial strain due to the frozen rates, particularly those providing essential public services.

The Independent

Despite the government's initiative, there is ongoing pressure from various groups, including the RAC, which has highlighted the significant rise in fuel costs. The Conservative Party has intensified its campaign urging Chancellor Reeves to reconsider a planned increase in fuel duty scheduled for September, arguing that it would further burden motorists already struggling with high fuel prices.

The Independent

The government plans to conduct consultations with affected workers as part of the review process. Any proposed changes to the mileage reimbursement rates will be announced in a future budget, with stakeholders closely monitoring the developments in light of the rising cost of living and fuel prices.

The Independent

• “Exchequer Secretary Mr Tomlinson said: “Millions of working people rely on their car to do their job.” — Dan Tomlinson, Treasury Minister

The Independent

• “It’s good news the Chancellor has listened and is heading in the right direction.” — Andrea Egan, General Secretary of Unison

The Independent