House of Commons · Westminster Hall
03 July 2023 · 11 other contributors · 11,317 words
Opened by Elliot Colburn Con Carshalton and Wallington
Responding minister: Gareth Davies
Summarised by AI from the official record, so it can contain mistakes.
Elliot Colburn raised concerns about approved mileage allowance payment rate in Westminster Hall. A government minister responded.
Key points
Key requests to Government
The Government should review and increase the AMAP rate to reflect current costs and commit to regular reviews of the allowance to ensure that those using their vehicles for work or volunteering are fairly compensated. The Minister is asked how much revenue would be impacted if the rate were raised to, say, 60p.
MPs spoke in turn to share their views and ask questions. Here's what each person said.
Opened the debate
The Approved Mileage Allowance Payment rate has been fixed at 45p/mile since 2011, which is a serious disincentive to volunteer drivers given the increase in fuel costs by over 20% over the last five years. This impacts volunteers who have helped during and after the pandemic, making it difficult for charities to recruit new volunteer drivers due to unfair compensation for car use.
The petition signed by over 40,000 members of the public asks for an increase in HMRC mileage rate from 45p to 60p per mile. The current AMAP rate has not changed since 2011-12 and fails to reflect rising motoring costs. A Unison survey shows that 91% of NHS staff who drive use their own vehicles, with over two in five travelling more than 4,000 miles a year for work. Asked the Minister for figures on how many people are using tax relief through the allowance system. Inquired whether work is being done behind the scenes to change the mileage scheme, noting that over 40,000 people have signed a petition on this issue.
Ms Qaisar highlighted the need to raise the approved mileage allowance payment rate due to rising fuel prices and maintenance costs, noting that the current rate has not changed since 2011. She mentioned that volunteers in her constituency are struggling with high transportation costs while supporting local services like NHS appointments. Additionally, she pointed out that those working in rural areas often have higher vehicle expenses.
The hon. Member for Isle of Wight (Bob Seely) supports the points made by his colleague and highlights the worries expressed by Mike Bulpitt, a volunteer chief executive, regarding difficulties in continuing to volunteer due to lack of rate increases.
The hon. Member for Belfast South and Mid Down (Claire Hanna) expresses concern that increasing motoring costs may exclude individuals from volunteering, which is beneficial to both them and their community.
I shared my concern that public sector staff, including housing officers and NHS workers, may leave their roles due to inadequate mileage allowances, which affects recruitment and retention in vital positions.
Jack Brereton highlighted the impact of the mileage allowance payment rate on constituents in Stoke-on-Trent South, noting that it is a hub for logistical industries and health care services. He mentioned that 38 constituents signed the petition and raised concerns about the insufficient rates for drivers who travel beyond their usual commute without company cars. The current rate has been frozen since 2011, leading to significant challenges due to post-pandemic inflationary pressures and fuel duty cuts. Brereton also pointed out issues with employers not applying the standard rate of 45p per mile and the impact on those who exceed the advisory annual limit of 10,000 miles.
The hon. Member for Lewisham East (Janet Daby) questions why the approved mileage allowance payment rate has not increased since 2011, despite rising motoring costs including fuel and vehicle maintenance expenses.
I paid tribute to the hon. Member for Carshalton and Wallington for his balanced argument on the issue of mileage allowance rate. I highlighted difficulties faced by people in East Lothian due to high mileage costs, especially with rising living expenses and fuel prices. I called for an increase in the allowance rate and proposed an annualised system to address the ongoing issue.
Mr Aldous highlighted the importance of reviewing the AMAP rate, which has remained unchanged since 2012. He cited concerns about community transport operators like BACT in north-east Suffolk and south-east Norfolk, whose volunteer drivers are crucial for delivering essential services but face financial disincentives due to the current rate. Suggested that volunteer drivers can claim extra tax relief if they show no profit but questioned whether few actually take it up due to the complexity of the system. Proposed simplifying by increasing the rate instead.
I expressed my thanks to Anna Birley from Unison for the report prepared. I acknowledged the concerns raised by other MPs about staff struggling with the current mileage allowance rate. Mr Gibson noted that his constituents in Darlington have signed the petition and highlighted the significant increase in fuel prices since 2021. He mentioned that one in five frontline service workers are required to drive for work, and the RAC Foundation research shows public sector vehicles are older and driven further than average. Mr Gibson also raised concerns about the higher fuel prices at supermarkets in Darlington compared to nearby Bishop Auckland. Clarified why the scheme applies in the NHS but not outside, and asked about potential tax consequences if an organisation were to opt for higher rates.
The hon. Friend is right that volunteers should not be penalised for their noble service and the rate affects recruitment of volunteer drivers to use private vehicles at a time when such help is needed.
Government Response
Gareth DaviesIt is a pleasure to see Mr Sharma in the Chair. The Government are committed to supporting individuals and businesses with the rising cost of living, including motoring expenses. AMAPs allow employees to receive tax-free reimbursement from their employer for business journeys using their own vehicle at rates of 45p per mile for up to 10,000 miles annually and 25p thereafter. These rates are designed as tax simplifications to make it easier for employers, employees, and small businesses to record mileage and calculate tax relief. They provide a trade-off between accuracy and simplicity for motorists, with some receiving slightly more or less relief than actual costs would suggest based on factors such as fuel efficiency and driving conditions. The AMAP rate is not mandatory; employee and employer expenses are determined individually by employers. Volunteers can receive payments in excess of the AMAP rate without tax if they provide evidence of travel costs, unlike employees who may be taxed on differences above the rate. The Government recognise the importance of volunteers and have announced an additional £100 million support package for charities and community organisations in England at spring Budget. The review period for AMAPs is conventionally held at fiscal events to align with the Office for Budget Responsibility's scoring process during the Budget, ensuring regular reviews. Self-employed individuals can choose simplified motoring expenses rates or deduct actual costs but cannot switch between options once chosen. To address cost of living issues, the Government have extended a temporary 5p fuel duty cut and cancelled inflation rise, saving £100 per household. Energy support was also extended with the energy price guarantee at £2,500 for three months from April, benefiting households by an additional £160. Free childcare hours were introduced alongside provider rate uplifts, and benefits uprating supported vulnerable households. An extensive review of AMAP rates is ongoing, incorporating engagement with industries and unions around fiscal events. The Government will continue to support communities through funding for voluntary organisations while ensuring employers determine expense reimbursement rates voluntarily.