The Confederation of British Industry (CBI) has called on the Government to raise the approved mileage allowance payment (AMAP) rates in the upcoming Spring Budget.
The mileage payments are tax-free expense reimbursements which allow employees to claim back mileage on business trip from their employers without incurring additional costs.
The rates cover the cost of filling up at a petrol forecourt or recharging at an EV charging station for business journeys.
The CBI argued that the current mileage rates are outdated and don’t take into account the rising costs despite the fuel duty freeze.
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The rates are cover the cost of fuel or electricity for electric vehicles for business journeys
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The main AMAP rate for the first 10,000 miles is 45p per mile and has remained at this level since 2011, while the rate for 10,000 miles or more is 25p per mile, and has not been updated since 2002.
Fuel prices have increased across the country with petrol rising by more than 3p a litre and diesel jumped by 4p in February.
The CBI warned that the existing AMAP rates are hurting both businesses and employees, as they discourage essential business travel and leave workers to pay the travel costs themselves.
Mohammad Jamei, CBI director of economic policy, said: “The Chancellor has a real opportunity to show he is on the side of motorists and working people who make vital business journeys every day.
“By increasing the tax-free mileage rates, he can ease the financial pressure on workers and their employers and encourage more business travel to boost productivity.
“As the year ahead holds many challenges for businesses, it is crucial that the Government removes barriers to growth and establishes a sound business environment.”
A recent CBI survey found that nearly one in five firms reported cases of employees refusing to make business journeys due to having to pay for the travel themselves.
One in three businesses remarked that the extra tax and administrations were a barrier to paying more, with over three in four saying they would pay higher amounts if the mileage rates were increased.Meanwhile, more than four out of five domestic business travellers outside of London use their private cars for business travels.
These travellers play a key role in the additional spending by employees on business trips which the CBI estimates contributes £6.7billion to the UK economy.
By increasing the tax-free AMAP rates, the Government would show its support for the millions of workers who depend on their own vehicles for business travel, the CBI noted.
The association also said it would also help to boost the economy by facilitating more business activity.
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The CBI argued that the current mileage rates are outdated and don’t take into account he rising fuel costs
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The Chancellor of the Exchequer will present his 2024 Spring Budget to Parliament on March 6 at around 12:30pm.
