Motorists take a "wage cut" driving for work

Motorists take wage cut driving for work
11 Jan, 2013 9:00am Claire Holden

Drivers who claim mileage expenses for work are being left out of pocket

Motorists who drive their own car for work are not being paid back as much in mileage expenses as they should be, according to research by the AA.

In March 2011, the Chancellor increased the amount a worker could claim on expenses before being taxed from 40p to 45p a mile (for the first 10,000 miles).

The move came after numerous complaints to the Government that drivers were effectively paying to work, because successive increases in fuel prices meant the allowance no longer covered their costs.

However, the AA says that only three out of every 10 get the full 45p allowance paid by their companies, largely because not all companies have taken up the offer of the extra allowance. Employers are not obliged to offer the maximum tax-free amount, with some allowing as little as 25p per mile, according to the breakdown firm.

The AA says that twice the number of drivers are now claiming for work-related mileage compared to 10 years ago, showing that companys are increasingly relying on their employees to provide their own transport for work. This means that out of a total of six million drivers, four million are left out of pocket.

AA president Edmond King says: “Between 2008, when petrol prices first approached 120p a litre, and March 2011, when petrol cost 133p before reaching 137.5p that summer, workers using their own cars were getting angry. Not only were they insulating firms from the impact of soaring pump prices but effectively taking a wage cut.

“The Chancellor’s 5p boost in 2011 went largely unnoticed, which the AA now reveals potentially affects six million working drivers. However, the unrestrained pump price surges over the past two years augur more pressure to raise the threshold in the not so distant future.”