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Mileage allowance increase in Budget23 Feb 2011by Janice May In today's budget, the Chancellor announced that he would increase the statutory mileage allowance from 40p to 45p (for the first 10,000 miles), acknowledging that 40p no longer covers the true cost of motoring. The change takes effect from 6 April 2011. When we looked previously at the AA's calculations in respect of the typical costs per mile of different-sized cars, we concluded that the mileage allowance was not enough even for small petrol cars. While our article was based on a 40p statutory mileage allowance, when we reviewed the AA's figures, we reached the view that a rise to 50p was needed, which we argued in our editorial: Statutory Mileage Allowance needs to go up. In the editorial we anticipated a rise to 45p which would still allow small cars to run at a small profit but a medium-sized family car would be costing 7p more per mile while, for a large family car, this figure would be 17p more per mile. Clearly, at a time of fiscal constraint, the more modest rise to 45p was to be expected. That it has been increased at all is to be welcomed but many of those using their family car for work will still be out of pocket even at this new rate. The business travel mileage allowance for journeys above the 10,000 miles limit will be 25p. To reduce motoring costs via cheaper car insurance, consult our resources below. |
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