MPs calls for fairer reimbursement and regular reviews of mileage rate to support volunteer drivers

They urged the government to review and increase the AMAP rate to adequately compensate individuals for their expenses. The government defended the current system as a tax simplification measure, emphasising voluntary compliance and the ability for employers to set their own rates.

Elliot Colburn, a Conservative MP who agreed to lead the Approved Mileage Allowance Payment rate debate, started the discussion by suggesting that volunteer drivers and healthcare workers are not being “compensated fairly for the use of their car” whilst inflation has gone up by over 25 per cent and fuel prices has increased. This has led to charities finding it difficult to recruit new volunteer drivers.

Highlighting the importance of volunteering, Colburn said that the present HMRC AMAP rate is “proving to be a real sticking point” for many charitable organisation in keeping their volunteers.

Claire Hanna (SDLP), agreeing with Colburn’s point on volunteering, wondered whether all community transport networks should be consulted in any review of the millage rate. Colburn answered positively and pointed out that volunteers are allowed to claim up to 45p a mile for the first 10,000 miles and 25p for each mile after that. The 45p rate has not been reviewed or increased since 2011.

Colburn continued by explaining that this year has not been an easy one for motorists with all the costs associated with vehicle use having increased, yet the AMAP rate remained the same. He said: “Many people I spoke to in the run-up to the debate argued not just for a review of the rate but for regular reviews, which could take into account fluctuations and would make the system much nimbler”. He argued that this would enable charities and employers to properly fund the drivers without concerns of ‘being penalised through the tax system’ for paying a more fitting rate.

He asked the minister to reveal how much revenue has been collected through overpayment of the AMAP rate and how that would be impacted if the rate were increase to 60p (as outlined in the petition).

Bob Seely (Con) who shared Colburn’s concern around this issue, highlighted that his constituents are also worried that volunteer drivers face difficulties to continue volunteering due to lack of an increase in the rate and regular reviews. He hoped that the minister is ‘listening and feeling generous’.

Kenny MacAskill (Alba) pointed out that it is not only the voluntary sector that has been affected but also those who are self-employed or working for a council, saying: “I have been pursuing [this matter] locally, it has often been put forward that there can be local settlements, but, the template tends to be HMRC’s and there are implications for taxation if that is not followed”.

MacAskill emphatically agreed with Colburn’s comment that the AMAP rate should be reviewed regularly and index-linked. He concluded his remarks by saying that the rate has passed its ‘sell-by date’ and “people must be recompensed for their work and not pay out of their own pocket to do their job.”

Hannah Bardell (SNP) said many of her Livingston constituents had signed this petition. She suggested that if staff are unable to get by on the millage rate that is being offered, they will move elsewhere, which will lead to a shortage of labour in some vital roles.

Conservative MP Peter Aldous explained that in the past the government has indicated that the rate is not mandatory and employers can set a different level of mileage reimbursement if they want to. However, due to the tax liability implications not many employers follow this instruction. He said the rate is regarded “as best practice and avoids the complications of drivers having to pay income tax.”

He expressed his concern over community transport operators who rely on volunteer drivers and support vulnerable people in particular in rural areas. The case for a fair, urgent and transparent review of the rate is compelling, said Aldous, and urged the Chancellor to look into this matter.

Jack Brereton (Con), also supporting this e-petition, said that the system needs to be fit for purpose. “I support the Lawson doctrine of lower tax rates funded by fewer tax breaks where possible, but there is clearly a need for a specific tax break, mileage allowance, to reflect the additional inflationary and other costs of using personal vehicles for work purposes”.

Brereton wondered whether the employer’s discretion in using the AMAP rate makes the system that ‘predictable’ for the driver, noting that there are a few employers who are not even offering the 45p rate. He suggested that one way to afford a more generous allowance is to change the system in a way that means only certain sectors qualify for a higher rate, such as social care and health care sectors and the voluntary sector.

The Stoke-on-Trent MP continued that rates need to be modernised and the government needs to consider reviewing the rate ahead of the autumn statement.

Peter Gibson (Con) welcomed the petition and agreed that the rate should be reviewed twice a year, taking into account changes in motoring costs. He highlighted that one in five frontline service workers drive to do their job with vehicles that are typically older than average. This causes those workers to be left out of pocket as the current mileage allowance stands. Likewise, he asked the minister to reform the rate, acknowledging that the government has recently cut fuel duty by 5p per litre.

Anum Qaisar (SNP) supported the idea of increasing the rate so that it gives better compensation to those who give back to society. “By failing to raise mileage rates at the last Budget, the UK government left employees and volunteers financially worse off,” she complained. She asked the minister to lay out what steps the government are taking to raise mileage rates.

The Shadow Exchequer Secretary, Abena Oppong-Asare, noted that the HMRC mileage rate is vital as it ensures that people are not out of pocket for the extra miles that they do in their private vehicle. She emphasised that with the increase in motoring costs and overall cost of living it is reasonable to ask the minsiter what impact the current mileage rate is having on the living standard of those affected.

Oppong-Asare also highlighted the difficulties that NHS and healthcare staff are facing regarding the AMAP rate and asked the government to listen and carry out the necessary steps in due course.

Gareth Davies, the Exchequer Secretary to the Treasury, explained that the AMAP is designed as a ‘tax simplification’ measure and intended to make it simpler for employers to record their mileage and calculate how much tax relief is due. He said: “The rates form the basis of a single calculation that can take the place of multiple calculations that would otherwise be required, which would be administratively taxing”.

Davies emphasised that the single rate is much simpler that an alternative calculation of actual expenses and in some cases may provide slightly more relief than the actual costs would. “Tax simplification is an ongoing priority for the government and, frankly, AMAPs helps us achieve that”, he declared.

The minister further noted that employees paid expenses above the AMAP rate may be taxed on the difference, depending on their personal circumstances. Acknowledging that the government appreciate the contribution that volunteers make to the community, he assured the MPs that volunteers can receive payments in excess of the AMAP rate and do not have to pay tax if they provide evidence that they have not made a profit.

Aldous found the Minister’s final comment interesting and asked if there are figures that show how many individuals have actually claimed this.

In relation to the review period of the rate, Davies explained that it is reviewed at fiscal events in line with most taxes. Addressing the position of self-employed individuals, he said these employees can choose to use simplified motoring expenses which allow them to deduct a fixed rate per mile against their self-employed profits – these rates mirror the AMAP rates. Alternatively, they can choose to deduct capital allowances and actual costs.

The Shadow Exchequer Secretary, putting pressure on the minister for an answer, asked if the Treasury has been lobbied directly on changing the mileage scheme and if any meetings or engagement have taken place regarding this matter.

Davies closed his remarks, thanking voluntary workers, in particular healthcare workers, and stressed that “paying the AMAP rate is voluntary” and it falls to the NHS as an employer to determine expense rates.

Prior to ending the debate, Gibson asked if the Minister could outline what tax consequences would be if an organisation chose to take higher rates. In response, the minister said: “If a rate is provided that is above the AMAP rate, national insurance and income tax would be applied to that difference, depending on the personal circumstances of the individual”. He summarised that the government set AMAP and simplified expenses rates to create administrative simplicity; however, it is ultimately for employers to determine the expense paid in respect of motoring costs that employees incur with their private vehicles.

Colburn called on the Treasury to consider this matter again ahead of the autumn statement and ended the debate by saying that “employers look to HMRC to set the standard… Many of them use the system, and not many would be tempted to incur a tax liability for going over that amount”.

You can read the full debate here.