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Volunteer expenses – cost of living, and HMRC mileage allowance for car users

from Trace Myers

Volunteering colleagues have recently shared an update with me I thought might be of interest to this group.

There is discussion about the rising cost of living and volunteer travel expenses, particularly the 45p mileage rate and it being increased. Part of the conversation relates to whether if organisations pay a higher rate to cover real cost and continue to include volunteers who use cars, whether this may have implications in relation to the perception of “payment” and the consequences that may come with that.

Eleven organisations including NAVCA and NCVO, have come together to call on the chancellor to consider the impact of rising fuel costs on the sector and volunteers being able to actually volunteer, by reviewing the mileage rate.  You can read more here.

The treasury, have stated that –

“The Approved Mileage Allowance Payment (AMAP) rate is advisory, and organisations are not required to reimburse at this level. It is ultimately up to the individual organisation to determine the rate of mileage reimbursement they offer employees or volunteers.” 

NCVO has commented

Lots of the answers to the various recent parliamentary questions and letters sent to ministers have made this suggestion that organisations can choose to pay above the approved mileage allowance payment. For volunteers, the suggestion is that organisations could pay above this rate if the volunteer is deemed not to have made a profit. Like you mention, there are concerns though that this could have unintended consequences for volunteers and organisations.

Our understanding of the HMRC guidance and government guidance is that the way you would calculate whether a volunteer has made a profit, would be to use the approved 45p rate. It may be that volunteers and paid staff could evidence that their costs exceed this rate using expense receipts or other methods. We took advice from our tax accountants, and they recommended that organisations either use this rate, or seek out their own tax advice.

These are a few explanatory notes for more detail:

Organisations can pay an Approved Mileage Allowance Payment (AMAP) without having to declare this for taxation purposes to HMRC. For the first 10,000 miles completed, this rate is currently 45p per mile, above 10k it is 25p per mile. This provides tax free compensation for miles driven as part of work or volunteering. There are other mechanisms for company cars and fleet vehicles.

This rate is an upper limit which was previously very generous, but costs have risen steeply and the rate has not been reviewed for 11 years. Practice seems to vary significantly on the rate that staff and volunteers are paid in different roles across the country.

Payments above this rate for paid staff which are above this rate and are not processed through payroll processes, need to be declared to HMRC and a P11D form completed. Volunteers may be required to complete a self-assessment tax return. This could be a real barrier for many volunteers, who might choose to stop driving if they believe their costs are not being met but do not wish to complete a return.

There is some guidance on calculating the costs involved in driving from the AA.
This guidance also describes passenger rates.

It is a complex issue, and we would err on the side of caution in following the approved rate, or seeking out individual tax advice. 

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