Drivers using their personal cars for business are paying up to £700 more than company car divers because HMRC has refused to increase mileage rates.

Over the past five years the tax free mileage rate that company car drivers can claim back has increase by 50% while for those that use their own cars the rate hasn't changed.

Accounting firm Wilkins Kennedy has estimated that with the increased cost of motoring, employees driving their own cars for business should be able to claim back 47p a mile and not the current 40p that HMRC allows. At 10,000 miles a year, this additional allowance would be worth £700.

Peter Goodman, senior tax partner at the firm said: 'The burden of increasing fuel costs falls equally on employees who use company cars or who use their own cars for business journeys. HMRC should recognise this by increasing tax free mileage rates for all business use rather than just company cars.'