Workers who drive own cars basically taking a "wage cut"

Article Claire Holden
Jan 11, 2013
Motorists claiming mileage are being under paid

Motorists driving their own cars for work aren't paid back as much in mileage as they should be.

Nearly a quarter of drivers are using their own car for company business, with the number of workers who claim mileage expenses topping six million. This is twice the number calculated in 2001 by the Government, according to the AA.

Companies are increasingly dependent on their employees to provide transport for work, as this reduces overheads and protects the company from the inflation of petrol prices. Instead, the worker is left to pick up the bill.

In March 2011 the Chancellor increased the amount employees can claim on expenses from 40p per mile up to 45p for the first 10,000 miles they travel on company business.

The move came after the Government received numerous complaints from many different organizations, including hospitals whose volunteer ‘meals on wheels’ drivers were out of pocket because of the petrol and maintenance bills they were racking up.

However, only three out of every 10 employees who claim mileage expenses gets the full 45p allowance back, largely because not all companies have taken up the offer of extra allowance.

Companies are not obliged to offer the maximum tax free amount, with some offering as little as 25p back for every mile driven. Some credit the employee with much more than the limit, reimbursing them with as much as 70p per mile, although this is subject to tax.

However, many employees are forced to accept a lower allowance because they did not read through the terms and conditions of their contract properly when they took up the position.

AA’s president Edmund King, said: “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 they were also effectively taking a wage cut.”

King said that twice the number of drivers claiming for work-related mileage compared with 10 years ago shows the extent to which companies have increasingly relied on their employees to provide transport for work.

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