Former minister Jim McMahon has urged the Government to order HMRC to finally update mileage rates to ‘show working people that they have a government on their side’
The self-assessment tax deadline passed last month, and HMRC will be busy checking that taxpayers have submitted accurate and timely tax returns.
That’s fair enough. But it’s time the tax office took its own advice and updated its inaccurate mileage rates, which have been frozen for 15 years and are now firmly out of date. Over that time, the cost of living has soared. Food, energy, rent and mortgages are all up, and so is the cost of running a car. For millions of people who rely on their vehicle for work, these costs are unavoidable.
Since 2010, petrol prices have risen by 15%. Car insurance is up 56%. Road tax is up 39%, while repairs and maintenance are up 40%. But HMRC’s mileage rate has stood still at a direct cost to working people. This does not just affect the self-employed. It also hits employees who are reimbursed for mileage by their employer.
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The very workers keeping our economy going are effectively paying to do their jobs, dragging real wages below the National Living Wage and deeper into the cost-of-living crisis. This is nothing short of a stealth tax on those doing the right thing and playing by the rules, sometimes leaving working people out of pocket by thousands of pounds.
The Government knows this. Health unions have successfully secured fairer reimbursement for NHS staff like community midwives and occupational therapists, currently at 56p per mile, compared with the HMRC rate of 45p. They are rightly continuing to campaign for rates that reflect the real cost of running a car.
For workers outside the NHS, such as home care staff, the situation is even worse. Many earn at or just above the National Living Wage, yet they are reimbursed around a quarter less than NHS staff and around a third less than the true cost of driving.
Research by Unison and the RAC Foundation shows the real cost of driving for work is now closer to 67p a mile. HMRC says taxpayers can calculate their own costs, but nine in ten employers rely on the official rate, meaning millions lose out.
For 14 years, the Conservatives allowed this injustice to continue. Working people are not asking for special treatment, just fairness.
Labour is the party of working people. That is why I’m calling for Government to instruct HMRC to finally refresh the mileage rate and show working people that they have a government on their side.


