By Euan McPherson – Chief Executive
The current rate that workers can re-imbursed for work mileage in their own vehicle without incurring tax is 45p per mile. This rate was set in 2011, 15 years ago, when average fuel prices were £1.33 for petrol and £1.38 for diesel. (https://www.gov.uk/expenses-and-benefits-business-travel-mileage/rules-for-tax)
The current wars in Ukraine and Iran have led to huge increases, with prices approaching £1.90 per gallon for diesel, however as we know this is only part of the picture. Since 2011 the cumulative CPI rise in inflation has been 50%.
The reality is many frontline care workers, particularly those in rural areas require a vehicle for work; it is not a luxury item for people who live, or support people in locations where there is not even a regular bus service.
In simple terms it is 50% more expensive to run a vehicle now than in 2011, the cost of parts, tyres, insurance, etc have all increased by at least 50%. To maintain the equivalent purchasing power as when the rate was set in 2011, the rate would need to be 65-68p per mile. For a rural care or support worker doing 240 business miles per week, this equates to roughly £36 per week or £1862 per year impact.
This is why at SIL we have consistently awarded pay increases above the level of inflation to help our frontline staff offset these pressures. However, while we have been able to operate a very lean business model to accommodate these increases, this is not sustainable in the long term without significant financial intervention from government.
There is an ongoing recruitment crisis in Social Care, despite it being an excellent, stable, fulfilling and interesting job. We therefore have to look at what some of the barriers may be, and the cost of vehicle ownership could tip the balance for many.
If we are to build a truly future proof and vibrant Social Care provision, that will meet the increasing demand in our communities, we need to ensure the people who work in the sector are valued and not penalised. This is something that could be addressed quickly and would have minimal impact on the Treasury, as most employers pay the tax-free rate and they would therefore not lose any tax revenue.
I call therefore upon the Government to increase the tax- free limit for work related mileage and provide a much-needed boost to all workers who require vehicles for work to at least 70p per mile.
