Experts have called on the Government to make urgent changes to rates paid by thousands of drivers to protect motorists from soaring fuel prices.
While the price of petrol and diesel has fallen for the first time in more than six weeks as a result of the Iran war, drivers are still struggling at the pumps.
The latest data from RAC Fuel Watch shows that drivers are paying an average of 158p for a litre of petrol and 191p for diesel.
Rising tensions in the Middle East has had a devastating impact on the price of Brent crude oil, which has been passed on to drivers on the forecourt.
To combat these expensive fuel prices, experts have urged the Government to increase Approved Mileage Allowance Payment (AMAP) rates for motorists across the country.
AMAP rates are used when reimbursing employees for costs associated with using their privately-owned vehicle for business, and can include fuel, insurance and maintenance.
Analysis from audit, tax and business advisory firm, Blick Rothenberg, suggests that Labour needed to “urgently” update HMRC rates to reflect the “current fuel and economic crisis”.
Approved mileage rates have not changed since the 2011/2012 tax year, with car and van owners paying 45p per mile for the first 10,000 business miles and 25p for every mile over the threshold.
Experts have called for AMAP rules to change in response to the fuel crisis
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PASimilarly, motorcycles will pay 24p for every mile they travel for work, while cyclists will pay 20p, although Robert Salter, a director at Blick Rothenberg, warned that these rates should change.
He noted that these changes did not take into account the cost of fuel before the war in Iran, adding that the HMRC rates “certainly need to be updated now”.
Mr Salter said: “In the years since the existing rates were introduced, general inflation, as measured by Consumer Prices Index (CPI), ignoring the recent impact of the Gulf Conflict on fuel prices, has increased by approximately 50 per cent, while motoring inflation, as seen in the price of used cars and car repair costs, has seen even more significant inflationary increases.
“This represents an increasing burden for those taxpayers who are obliged to use their private vehicles for business and could discourage them from taking on particular job opportunities if they involve driving further afield.”
Fuel prices have fallen slightly in recent days
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PAThe charge for company cars is based on the price for tax purposes, and multiplied by “an appropriate percentage” based on the CO2 emissions rate of the vehicle and the fuel the car uses.
In the 2026/2027 tax year, charges for company vans are £4,170, while the car fuel benefit multiplier stands at £29,200.
Mr Roper continued, saying: “While AMAP rates will never be perfect, they are a rounded allowance rather than a perfect reflection of every individual person’s car mileage cost.
“They currently represent a form of tax unfairness that is undermining the UK’s underlying economic growth. They must be increased to accurately reflect fuel and motoring costs for workers.”
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There has been some optimism around the cost of fuel in recent days as Iran and the United States conduct peace talks in the Middle East to agree on a ceasefire.
Despite this, Iranian forces have taken direct action against some vessels attempting to cross the Strait of Hormuz, raising the possibility of further escalating tensions.
The RAC is forecasting that petrol and diesel prices will fall in the near future, describing it as a “glimmer of light at the end of the tunnel”.
Simon Williams, head of policy at the organisation, added: “Wholesale prices are still lower, so we’re hopeful there will be further reductions amounting to several pence a litre in the coming days.”