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Closed petition 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.

More details

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.

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Parliament debated this topic

This topic was debated on 3 July 2023

Watch the petition 'Increase the HMRC Mileage Rate from 45p/mile to 60p/mile' being debated

Government responded

This response was given on 11 October 2022

The Approved Mileage Allowance Payment rate is advisory and is 45p/mile for the first 10,000 miles and 25p thereafter. As with all taxes and allowances, the Government keep the AMAP rate under review.

Read the response in full

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.

You can find the original response, with details of the inaccuracies in it, towards the bottom of the petition page.

Original Government Response

The AMAP rate is advisory. Organisations can choose to reimburse more than the advisory rate, without the recipient being liable for a tax charge, provided that evidence of expenditure is provided.

The Approved Mileage Allowance Payment (AMAP) rate aims to reflect running costs including fuel, servicing and depreciation. Depreciation is estimated to constitute the most significant proportion of the rate, with fuel constituting around a third of total costs included in the rate. In most cases, only a proportion of non-fuel costs can be attributed to business usage, and the AMAP rate takes this into account.

The current advisory rate is 45p/mile for the first 10,000 miles and 25p thereafter and applies to employees and volunteer drivers who use a private car for business mileage. The rate applies across all fuel types.

The AMAP rate is intended to create administrative simplicity by using an average. This means that the rate will be more appropriate for some drivers than for others.

The AMAP rate is advisory, and organisations are not required to reimburse at this level. It is ultimately up to the individual organisation to determine the rate of mileage reimbursement they offer employees or volunteers.

Organisations can agree to reimburse drivers the actual cost incurred, where individuals can provide evidence of the expenditure, without an Income Tax charge arising.

There are extraordinary global circumstances contributing to the sustained period of high fuel prices, among them the Russian invasion of Ukraine. 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 response was given on 20 July 2022. The Government requested to update the response to rectify inaccuracies in the original response, to which the Petitions Committee agreed.

The response stated that actual expenditure in relation to business mileage could be reimbursed free of Income Tax and National Insurance contributions, but this is in fact only possible for volunteer drivers. Where an employer reimburses more than the AMAP rate, Income Tax and National Insurance are due on the difference.

Government submits corrected e-petition response

On 20 July 2022, HM Treasury responded to e-petition 600966, "Increase the HMRC Mileage Rate from 45p/mile to 60p/mile".

The Government’s response explained that the Government’s AMAP rates are advisory, and that organisations can choose to reimburse more than the advisory rate, without the recipient being liable for a tax charge, provided that evidence of expenditure is provided.

The response stated that actual expenditure in relation to business mileage could be reimbursed free of Income Tax and National Insurance contributions, but this is in fact only possible for volunteer drivers. Where an employer reimburses more than the AMAP rate, Income Tax and National Insurance are due on the difference.

Because its original response to e-petition 600966 was factually inaccurate, HM Treasury has asked to replace this with a corrected response, which you can read on the e-petition's webpage.

Guidance available on GOV.UK has been correct and the Government has said that it believes that the number of taxpayers who could be affected is very small.

HMRC has said that it is taking steps to bring this inaccuracy to the attention of employers and employees where necessary, and that should any cases arise they will work on an individual basis aiming to ensure that any taxpayers who relied on incorrect information are not disadvantaged.