Millions of drivers may soon claim more for mileage expenses, as the government launches a “workers-first” review.
Treasury minister Dan Tomlinson stated the 45p-per-mile rate review was “well overdue”.
Unchanged since 2011, he acknowledged this stagnation had increased “the cost of working”.
Chancellor Rachel Reeves announced the review this month, with the Treasury offering further details. The government intends to consult workers facing rising motoring costs during the process.
Exchequer Secretary Mr Tomlinson said: “Millions of working people rely on their car to do their job.
“But mileage rates have been unchanged since 2011 and that’s increased the cost of working. A review is well overdue.
“Keeping prices down at the pump is an important way we can help people with the cost of living which is why fuel duty is already frozen.”
The approved mileage allowance payment defines how much employees can be reimbursed tax-free for using their own cars for work.
Drivers can currently claim 45p per mile tax-free for the first 10,000 miles which is supposed to cover running a vehicle, including insurance and servicing.
After that drivers can claim 25p per mile. An additional 5p per mile can be claimed for each passenger transported.
Officials said the “workers-first review” will focus on people who rely on a car to do their job.
Any changes to the rate would be announced at a future budget.
Unison general secretary Andrea Egan said: “This review is long overdue. Many workers have paid a heavy price for simply going about their jobs due to frozen rates.
“For people providing essential public services who need their own cars for work, that’s left them thousands of pounds out of pocket.
“It’s good news the Chancellor has listened and is heading in the right direction. Particularly when household bills are on the rise again.”
The Government has been under pressure to do more to help motorists as fuel prices soar in response to the oil and gas crisis triggered by the war in Iran.
Diesel prices have risen by nearly a quarter since the start of the conflict in the Middle East.
The RAC said the average price of a litre of the fuel at UK forecourts reached 175.7p on Wednesday, up 23% from February 28 when the US-Israeli bombing campaign against Iran began.
Average petrol prices have increased by 13%, from 132.8p to 149.4p.
The Tories have stepped up a campaign to persuade Ms Reeves to scrap an increase in fuel duty which is due in September.
