Mileage rates fuelling employees’ misery

If you’re travelling for work and using your own vehicle, you’re probably feeling pretty hard done by. With fuel already exceeding £2 a litre, other running costs increasing, and the mileage rates stuck at 45p per mile for the first 10,000 miles, it’s a miserable situation. The mileage rate has not changed since 2011, but drivers’ costs certainly have.

Your employer could try to ease your pain by paying a higher fuel rate, but HMRC considers this to be a taxable benefit and consequently both you and your employer would face a more complicated tax situation.

A fairer solution would be for the government to increase the mileage allowance rate, which would be tax neutral for the employee. The employer could deduct these additional costs from its corporation tax bill. While employers may prefer not to pay more, it would be fairer to their employees, whose alternative might be working from home or finding another role elsewhere, which could ultimately cost the employer more anyway.

If you’re looking for ways to reduce your tax liability, please do get in touch.