Research by tax refund experts, RIFT Tax Refunds, has revealed why a cut in fuel duty in today’s Budget is essential, as soaring fuel prices mean the average person is now out of pocket by almost £500 when claiming via the fuel allowance for work related travel.
While not obligatory, the HMRC’s AMAP amount for employers, or the sum that they can claim back for work related vehicle travel expenses, is 45p per mile for cars and vans for the first 10,000 miles and 25p per mile thereafter. This includes fuel, service and repairs, maintenance, depreciation and insurance and road tax, but excludes other costs such as tolls, parking fees or road fines.
Figures from the RAC Foundation show that the average person will clock 13,200 work-related miles when travelling, amounting to a total allowance of £5,300.
RIFT’s research shows that the average cost of service and repairs, maintenance, depreciation, insurance and road tax comes to £3,574.
With the average car doing 46 miles per gallon, RIFT estimated that a year ago, the average fuel bill would have also totalled £1,645. When combined with the wider cost of running a vehicle, this cost totals £5,300, meaning it sat comfortably within the allowance of £5,300.
However, with fuel costs climbing considerably in recent months, RIFT estimates the average annual fuel bill has now climbed to £2,149, meaning the total cost of maintaining and running a vehicle for the year sits at £5,723, well over the total allowance of £5,300.
So why does fuel duty matter?
Well, fuel duty accounts for 35% of the total cost of petrol and 32% of the total cost of fuel. Reducing this cost could, if substantial enough, rebalance the books and prevent those claiming back work related travel costs from being out of pocket.
CEO of RIFT Tax Refunds, Bradley Post, commented:
“We’re strongly hoping that rumours of a reduction in fuel duty in today’s Budget are true. The soaring price of fuel now means that those who are claiming work related travel costs back are still out of pocket even after they have.
For many, this means that the ability to travel for work will actually be costing them money and this certainly isn’t ideal, particularly off the back of two years of pandemic uncertainty and financial hardship.
Let’s just hope any move made by the chancellor today will be a meaningful one that will actually make a difference and not a meagre offering in an attempt to grab headlines.”
