In depth: Legal aid lawyers can't even get paid for their petrol

In May, HM Treasury announced the largest-ever increase in the mileage rate for employees using their own car for work. It went up from 45p to 55p for the first 10,000 business miles, reflecting the impact of the Iran war on fuel prices. This was only the second increase to the approved mileage allowance rate in 15 years.

The change was applied retrospectively to the beginning of the 2026/27 tax year. But unfortunately, the Legal Aid Agency has not yet adopted the higher rate. Feedback from the Law Society and Legal Aid Practitioners Group to the LAA’s latest travel and subsistence review reveals that the 10p difference has hit cash-strapped legal aid firms hard.

‘The Legal Aid Agency’s delay in considering whether to match this rate places providers in an unsustainable position,’ LAPG said. ‘Firms are rightfully paying their staff the fair, HMRC-approved rate of 55p per mile because it is reasonable and staff expect it, yet they can only recover 45p from the LAA. Providers are consequently forced to take on this financial shortfall directly. For firms whose staff travel extensively to courts, tribunals and prisons, these losses can be significant.’

It may seem nugatory, but the 10p difference has added another layer to legal aid firms’ hefty pile of unpaid admin work.

The Society said: ‘Each mileage claim must already be supported by accurate details of the journey, including start and end postcodes, distance and time taken. For fee-earners attending court, this can result in numerous individual claims each month. If the legal aid rate remains at 45p per mile while firms reimburse staff and experts at 55p per mile, providers must record the same travel twice – once at the recoverable legal aid rate for billing purposes, and again at the actual reimbursement rate for internal accounting and payment purposes. This duplication is inefficient, disproportionate and unnecessary.’

Law firm chiefs are not obliged to make up the 10p difference. An HMRC policy paper says the 55p mileage rate is advisory and staff can claim tax relief by applying for mileage allowance relief on the difference.

'Failing to align the legal aid rate forces providers to offer what experts deem to be a depressed allowance. This inevitably results in lengthy negotiations, increased billable time spent disputing travel expenses, and routine demands for invoice amendments'

Legal Aid Practitioners Group

However, Chancery Lane and LAPG point out that stagnant fees have led to the legal aid sector haemorrhaging practitioners. Expecting staff to sort the shortfall out themselves is just another disincentive to do legal aid work.

Instructing expert witnesses will also become more difficult. LAPG said: ‘Securing external experts willing to accept instruction at legal aid rates is already a well-documented crisis across the justice system. Experts are entirely aware of the updated HMRC rates and naturally expect their travel to be remunerated at 55p per mile. Failing to align the legal aid rate forces providers to offer what experts deem to be a depressed allowance. This inevitably results in lengthy negotiations, increased billable time spent disputing travel expenses, and routine demands for invoice amendments.’

Even if the LAA sets the mileage rate at 55p, rates could rise again. ‘Looking ahead beyond 2026/27, the government has already committed to a review of these rates and will set this out at the budget,’ the exchequer secretary to the Treasury told the Commons in May.

The LAA told the Gazette that mileage rates are set through a separate framework to HMRC’s approved mileage allowance payments and are not determined by them. Any change to LAA rates would have to be a ‘considered decision taken on its own merits’.

An LAA spokesperson said: ‘We have sought feedback from stakeholders on increasing the LAA mileage rate and are now in the process of considering responses. A decision will be made in due course.’

It remains unclear whether firms will be able to recover the cost of making up the 10p difference over the last few months.

The LAA’s review also covers hotel and subsistence. The Society and LAPG both highlight the need for a better system.

Practitioners can claim up to £165 in London; up to £120 in Birmingham, Liverpool, Leeds, Manchester and Newcastle; and up to £100 elsewhere, including VAT. Mid-range hotels in London can cost a lot more than that. But with court listings often not confirmed until the day before, LAPG said practitioners and advocates cannot always take advantage of lower rates.

The LAA can exercise discretion and approve a higher rate. But the Society says securing LAA approval creates extra work ‘at precisely the point when providers are dealing with urgent case preparation, court deadlines and client needs. A system that routinely requires individual applications for realistic accommodation costs is not efficient for providers or the LAA’.