Increase the HMRC Mileage Rate from 45p/mile to 60p/mile

The HMRC mileage rate for reimbursing the use of private cars (e.g. for employees but also volunteers) has been fixed at 45p/mile (up to 10,000 miles) since 2011. The lack of any increase since then is a serious disincentive to volunteer drivers particularly as fuel has gone up again recently.

Since 2011, inflation has gone up by over 25%; fuel has increased by over 20% over the last 5 years. Volunteer car drivers who did so much during Covid, and still do, to get people to healthcare settings, e.g. hospitals, vaccination centres, and to deliver shopping and prescriptions, are not being compensated fairly for the use of their cars. Consequently charities are struggling to recruit new volunteer drivers. These drivers help free up hospital beds and keep people independent and in their own homes.

The Government sets the Approved Mileage Allowance Payment (AMAP) rates to minimise administrative burdens.

The current AMAP rates allow employees to claim up to 45 pence per mile for the first 10,000 miles and 25 pence for each subsequent mile, tax free, if they use their private car or van for business purposes. An additional 5 pence per mile may also be claimed for every passenger transported.

The AMAP rate is intended to create administrative simplicity by using an average, which reflects vehicle running costs including fuel, depreciation, servicing, insurance, and Vehicle Excise Duty. As it is an average, the rate is necessarily more appropriate for some drivers than others.

Employers are not required to use the AMAP rates. Instead, they can agree to reimburse a different amount that better reflects their employees’ circumstances. If an employee is paid less than the AMAP rate, they can claim Mileage Allowance Relief (MAR) on the shortfall. However, where payments exceed the relevant AMAP rate, there will be an Income Tax and National Insurance charge on the difference.

At Spring Statement 2022 in response to fuel prices reaching record levels, the government announced a temporary 12-month cut to duty on petrol and diesel of 5p per litre. This cut represents savings for households and businesses worth around £2.4 billion in 2022-23.

As with all taxes and allowances, the Government keeps the AMAP rate under review.

HM Treasury

This is a corrected response. The Government requested to update the response to rectify inaccuracies in the original response, to which the Petitions Committee agreed.