Labour Government to Review Outdated 45p Per Mile Rate After Public Petition
The Labour Party government has agreed to review the long-frozen business mileage allowance of 45p per mile, following an urgent petition on the Parliamentary website calling for it to be raised to 70p per mile. This move comes as drivers, particularly the self-employed and small business owners, face potential annual losses of up to £2,500 due to the stagnant rate that has not changed since 2011.
Petition Highlights Financial Strain on Workers
The petition, launched by Neil Michael Wyatt, argues that the current 45p per mile rate is "unfair and outdated," penalising those who rely on their vehicles for work. It points out that fuel, insurance, and maintenance costs have soared over the past fifteen years, with UK prices increasing by approximately 49.2% since April 2011, according to Bank of England data.
Wyatt emphasised, "The business mileage rate has been stuck at 45p per mile since 2011 – despite rising costs. It effectively becomes a hidden tax on self-employed individuals and small businesses, who are subsidising their employers out of their own pockets."
Impact on Drivers and the Economy
For workers claiming the maximum 10,000 miles of business travel annually, the difference between the proposed 70p rate and the current 45p rate translates to a loss of £2,500 per year. Even those driving just 1,000 miles annually would be £250 out of pocket, highlighting the widespread financial impact.
Employers typically set mileage allowances based on the HMRC rate, which the petition claims is now unrealistically low. This not only affects tax relief but also means drivers are underpaid for travel expenses, undermining their earnings and putting additional strain on the economy.
Government Response and Call for Action
In response to the petition, Exchequer Secretary to the Treasury Dan Tomlinson acknowledged the issue, stating, "Millions of working people rely on their car to do their job. But mileage rates have been unchanged since 2011, and that's increased the cost of working. A review is well overdue."
The Labour government's commitment to review the mileage allowance is seen as a critical step toward supporting SMEs and freelancers facing growing financial pressures. Updating the rate to reflect real-world costs could provide much-needed relief and fairness for drivers across the UK.
