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Mileage rate review “long overdue” after years of workers losing out

27 March, 2026

The decision to review mileage rates ahead of a future Budget is “long overdue”, says the Association of Taxation Technicians (ATT), but doesn’t go far enough to help workers already out of pocket.

The Government announced the review of rates this week,1 saying millions of drivers who claim motoring expenses could benefit. The current Approved Mileage Allowance Payments (AMAPs) have remained unchanged since 2011, despite a sharp rise in motoring costs.

Recent analysis shows:

  • Motoring costs have increased by almost 60% over the last 10 years, including a 220% rise in tax and insurance costs2 
  • The current 45p rate set in 2011 would need to be around 67p in 2026 to keep pace with inflation (based on the Bank of England inflation calculator)3

The ATT says while a review of rates is welcome, 15 years of frozen rates mean many of those who use their own cars for work have been left out of pocket, or even paying for their own work travel.

In its 10 asks for the tax system in 2026,4 the Association identified a number of fixed rates and reliefs in the tax system which are in need of updating.

Jon Stride, chair of the ATT’s Technical Steering Group said:

“It’s disappointing that the government is only committing to a review ahead of a future Budget.  We would like to see much more urgency. This long overdue review alone won’t help those  workers who have already been out of pocket for years due to outdated mileage rates.

“These rates have not changed since 2011, despite a dramatic increase in the real cost of motoring. In real terms, the current 45p rate is now worth closer to 67p. That gap represents a significant cost for employees who rely on their vehicles for work.

“Mileage rates are just one example of a wider problem that needs urgent attention. Other exemptions and reliefs have not kept track with inflation and need to be reviewed, including those for annual work parties, tax free trivial benefits for employees and the amount employers can pay employees tax free for working from home.”

Notes:

  1. Mileage rates review to support working people
  2. RAC Foundation: Motoring price index
  3. Bank of England: Inflation calculator
  4. Read the full recommendations