The government should increase the mileage rates that employees receive for the cost of using their own vehicle for work purposes, according to researchers and trade unions.
Last month, the RAC Foundation, a transport policy and research organisation, highlighted the need to increase Approved Mileage Allowance Payments (AMAPs) – which have not increased for 12 years – saying drivers are being penalised because the costs of car ownership have risen dramatically, primarily driven by tax, insurance, maintenance and increased fuel prices.
Its AMAPs analysis found that frontline workers – often people on relatively low pay – who use their car for work are out of pocket by an average of £6,000 a year due to out-of-date mileage rates.
AMAPs have only increased once, in 2011, since their introduction in 2002, from 40p to 45p per mile for the first 10,000 business miles travelled.
Trade union Unison has said that more than a million public sector workers including care staff, district nurses, housing officers, police staff and probation officers are being left thousands of pounds out of pocket because ministers have failed to update national mileage rates.
Its report, Driven Out of Work, says the allowance should be 63.4p a mile based on increased motoring costs and inflation.
Steve Gooding, director of The RAC Foundation, said: “We know that some of our most important workers – those employed in health and social services, and in supporting roles, often working outside ‘normal’ office hours – need to drive their cars for work, but are being left out of pocket by the failure of ministers to sanction an uplift in the amount per mile they can receive tax-free for getting around to do their job.”
Unison general secretary Christina McAnea said: “Mileage rates are woefully out of date. No one should pay a penalty effectively for doing their job, least of all those providing vital services.
“Petrol prices have skyrocketed. Care workers, nurses and other frontline employees can barely make their incomes stretch to cover the basics, let alone the costs of using their vehicles for work.
“The government must tackle low pay now, not threaten to hold public sector wages down. Essential staff shouldn’t be out of pocket for going to work. A failure to act now risks worsening the already dire staffing crisis.”
Community care worker Debbie Pink told Unison: “We have not had an increase in our mileage costs for 12 years, yet the fuel prices have vastly been inflated. It’s costing me more and more to travel and use my car, not to mention the cost of repairs to my vehicle due to the road surfaces.”
Employers can pay their staff more than the Approved Mileage Allowance Payment for using their own vehicles, but any amount in excess of AMAP is liable for income tax for the employee and national insurance contributions for the employer. Accordingly, many employers opt to pay the standard amount.
NHS staff on the Agenda for Change contract receive more, with mileage rates paid at 59p per mile for the first 3,500 miles, but only 24p per mile above that cap.
Anne, a child health assistant in Northern Ireland, said the 3,500-mile cap needs to be addressed, as well as the mileage rates. She said: “I spend my days driving to around six homes per day. Some months I’m doing 400 miles, and some over 600. The mileage calculations run from the tax year, so the first six months are fine.
“But when I hit December, I’ve gone over 3,500 miles and I’m onto the lower rate of mileage. Fuel-wise I’m spending more than what I’m getting paid and it’s not enough.”
Last October, an Early Day Motion was tabled in Parliament stating that AMAPs needed urgent review by HM Revenue and Customs. It received more than 100 signatures from MPs of all parties.
To date, the government has not indicated that it intends to increase AMAP rates and the issue was not mentioned in the 2023 Spring Budget.
The RAC Foundation also found that since advisory fuel rates for company cars are set on a quarterly basis by HMRC, periodic revisions of AMAPs could also be regularly updated.
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