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Drivers who use their own cars for work purposes are not being fairly reimbursed, according to the RAC Foundation.
It has cited the Treasury allowing workers to get a tax-free amount of up to 45p per mile from their employer for the first 10,000 miles per year which they drive in their own vehicle.
However, the RAC Foundation says this allowance has not been increased since 2011, despite the cost of motoring now being 41% higher on average than it was then, according to the Office for National Statistics (including tax, insurance, maintenance, car purchase price, and fuel).
The RAC Foundation has therefore argued that the rate should be increased to around 63p per mile, and that on this basis, currently an employee who does 5,000 miles annually is missing out on £900 a year.
The research was carried out to inform a report by trade union Unison.
RAC Foundation director Steve Gooding said: "We think the Treasury should commit to an urgent review of the mileage rate and not leave it another decade before revisiting it again."
Companies can choose to reimburse drivers at a higher rate than 45p per mile, however any payment over that amount will be taxed.
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