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The Government needs to provide urgent additional support for employees and the self-employed using private vehicles for business purposes.
That’s the opinion of Robert Salter, a tax specialist with tax and advisory firm Blick Rothenberg, said: “The Government hasn’t increased the approved reimbursement rates which one can claim for each business mile travelled in a private vehicle for over 10 years now. Given the majority of business trips are done in employee’s own vehicles – as opposed to company cars, they need to step up.”
Salter said: “The Government’s current approved reimbursement rates, which in very simple terms represent the most an employer can reimburse to an employee, if they don’t want to create tax (PAYE) or NIC issues – are now hopelessly out of date, given that they haven’t changed since at least the 2012/12 UK tax year.”
He added: “More worryingly, they also mean that employees are having to personally bear at least some of the costs associated with travelling to visit clients etc., on their employers’ behalf, which is clearly nonsense and unfair.”
Robert said: “Someone who travels 20,000 miles per annum on business in their own private vehicle can receive the following per mileage reimbursement from their employer:
– 45 pence per mile for the first 10,000 business miles; and then
– 25 pence per mile for any business miles over 10,000 in that tax year.
“As these reimbursement rates cover ‘all’ the costs of someone’s business travel – including the cost of depreciation, additional insurance costs and the petrol / diesel costs which arise – the rates do not typically cover the real price suffered by the employee.
“This is particularly true for those employees who are required by their employer to drive a ‘nice car’ – that is one which is, for example, not too old and gives off a solid, professional impression from a business perspective, but for which, one will therefore suffer increased depreciation costs which are unrecoverable.”
He added: “If the Government had simply increased the above reimbursement rates by general inflation, motorists would be entitled to 61 pence per mile for their first 10,000 business miles per annum and 34 pence per mile thereafter. In practice, one could argue that the rates should be even higher than this, as using general inflation doesn’t fully capture the fact that UK car prices (and service costs) have shot up significantly more than general inflation over the past 10 years. A recent report highlighted that the average price of a used car in the UK had increased by 32% in the 12 months to April 2023.”
Salter concluded: “Whilst there are no easy or simple solutions to this issue for either employees or employers, the fact that the Government hasn’t changed the above rates since 2011/12 highlights the manner in which the Government increasingly relies upon ‘stealth taxation’ to punish hard-working business motorists who are – in many respects – the backbone of the British economy.”
