As reported in last week’s WSCT, HDC leader Ray Dawe apparently supports the ‘status quo’ regarding the payment of tax on mileage claims paid to councillors.
I think this requires some explanation and comment. HMRC allow tax relief of up to 45p per ‘business mile’. That is presumably why the vast majority of councils (and businesses) have 45p as their mileage rate.
Horsham District (60.1p) and West Sussex County (57.25p) are notable exceptions! However HMRC is adamant that business mileage cannot include the commute from home to main place of work.
The Local Authorities (Members’ Allowances) Regulations 2003 clearly define the ‘main place of work’ for councillors.
These deem that unless councillors are routinely seeing residents at their home, then their main place of work is not home but the council headquarters, ie where they mostly would attend meetings.
So, mileage payments for this ‘commute’ should be taxed in full as they are not ‘business miles’. Any company employee would fully understand this, ie you cannot claim tax relief on your commute to work costs.
But it appears that councillors have not appreciated this and so for many years have been claiming 45p per mile tax relief on their generous travel allowance
to simply ‘get them to work’.
Company employees can only dream of such benevolent treatment of their commuting costs with both reimbursement and tax relief; absolute heaven!
So what has brought this issue to the fore? Well it could be as a result of the debacle in summer 2013 at Kent County Council which went head-to-head with HMRC on this very issue.
Kent CC spent over £5,250 of taxpayer funds on specialist tax advisors but still failed to win the ‘main place of work’ argument.
Unbelievably, faced with losing, they even voted for a ruse to increase their mileage rate by 47 per cent, so that after tax/N.I. deductions councillors would still get their original rate!
Fortunately, bad publicity and local pressure forced them to back down. ‘Magnanimously’, having lost, the leader of Kent CC wrote to HMRC ‘I need your absolute assurance that this system will apply to all elected members across the country’.
So, Cllr Dawe, it appears that your faith in the ‘status quo’ on this subject is fiscally misinformed.
Also, you may well have to blame a ‘neighbouring’ council leader (and from your own party too!) for dropping you all in it. Welcome to the real world!
Cox Green, Rudgwick