Should HMRC Increase Business Mileage Rates in 2022?

Published / Last Updated on 10/08/2022

If you use you own car, van, motorbike or 'push bike' you can currently claim the following expenses for mileage.  This is either by employer refund or if employers do not refund business mileage, you can claim the expenses as apart of self assessment.

 

1st 10,000 business miles

Excess business miles over 10,000

Cars and vans

45p per mile

25p per mile

Motorbikes

24p per mile

24p per mile

Bicycles

20p per mile

20p per mile

The above mileage rates were set by HMRC in 2011 when fuel prices we much cheaper than they are today:

  • 04/07/2011 average price for unleaded petrol £1.3343 per litre
  • 04/07/2022 average price for unleaded petrol £1.9155 per litre

(Source: Office for National Statistics https://www.gov.uk/government/statistics/weekly-road-fuel-prices)

For an average urban car journey cycle of say 40 miles per gallon (mpg), which equates to 8.8 miles per litre (mpl) and the following costs/claim if you drive 100 business miles:

100 miles = 11.36 litres used @ 8.8 mpl

Cost at pump

Mileage claims @ 45p per mile X 100 miles

Ratio to also cover wear and tear, insurance, road tax, tyres, oil, depreciation, parts, labour,

Cost of Fuel 04/07/11

£1.3343 per litre

£15.15

£45.00

Roughly Treble

Cost of Fuel 04/07/22

£1.9155 per litre

£21.76

£45.00

Roughly Double

The huge increase in fuel prices over the last few years would appear to justify an increase in mileage rates for cars/vans to say 60p per mile to keep in line with 2011 mileage rates.

Our best guess is that the Government and HMRC will take little action as it means:

  • We cannot claim as much in expenses when using our own vehicles.
  • Greater tax revenue for HMRC as less is allowed to be offset as expenses either by your or your employer.
  • Greater tax revenue is needed to pay for Covid-19 debt.
  • To encourage us to use our cars/vans less which of course is better for climate change and lower CO2 emissions.

What if your employer wants to pay a greater mileage rate than 45p per mile?

You will face a tax charge as a benefit in kind.

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