IPSE's letter to the newly appointed Chancellor

Following the appointment of Nadhim Zahawi as Chancellor on Tuesday, IPSE has written to the Chancellor raising the pressing issues that continue to impact those who work for themselves, calling for an immediate increase to mileage allowance.

In introducing the work of IPSE and the issues currently facing the self-employed, the letter focuses on the impact of IR35 and how the reforms have forced many self-employed individuals to change the way they operate. Similarly, the letter raises the ongoing Managed Service Companies (MSC) review by HMRC, which has caused confusion and stress for those affected.

IPSE has also promised to write to the Chancellor in the coming months on plans to increase corporation tax from 19p to 25p in April 2023.

However, a focal point of the letter was the need to immediately review the current rate of mileage allowance, to better reflect surging fuel costs.

Mileage allowance

In the face of record high petrol and diesel prices that are a significant driver behind increases to the cost of living, IPSE has called on the Chancellor to increase the mileage allowance from 45p to 90p per mile, and then reviewed every two years.

The proposal, first put forward by accountancy firm Hillier Hopkins, would provide immediate relief to businesses whilst enabling government to review the allowance rate should petrol prices fall in future.

The current rate of 45p has been in place since 2011; with self-employed businesses that rely on the use of their vehicles now reporting that they have had to turn down work or significantly raise their prices, it is time the Treasury reviews this mechanism and provides a lifeline to these struggling businesses.

IPSE has been contacted in recent weeks by members raising concerns about the current mileage allowance rate, with their stories often recounting the difficulty in maintaining their current business with travel to their clients requiring road travel. In fact, the increased cost of fuel has meant that many are either seeking work within a smaller radius, trying to pass the cost on to clients or simply rejecting work altogether. These self-employed businesses are now struggling to absorb cost increases and without a change to the current mileage allowance rates, it could see these businesses fall by the wayside.