Volunteer Drivers

Reduced mileage allowances will threaten vulnerable patients

10 March 2008

If volunteer driver mileage allowances are slashed in the Budget, vulnerable patients could be left with no way to get to hospital, warns the AA today. Essential rural community services would also suffer.

A review of the Approved Mileage Allowance Payments (AMAP) scheme, the system governing tax-free reimbursements for drivers who use their own cars for business, community services or voluntary work, is considering cuts in allowances. These may make it impossible for higher-mileage volunteer drivers to work unless they themselves pay much of the cost of their own good Samaritan trips.

At present, anyone who drives their own car at work can claim up to 40 pence per mile for the first 10,000 miles. Beyond that mileage, they can claim 25 pence per mile. Any payments above these thresholds are deemed to be 'profit' and therefore subject to income tax.

Reimbursements for car use by volunteers are tax-free but limited to the AMAP thresholds1. Payments above the thresholds, being seen as income, change the status of the driver from voluntary to car hire. This would invalidate their motor insurance for voluntary work and leave them illegally unlicensed to carry passengers under the Public Passenger Vehicles Act 1981 2.

Indications suggest that AMAP thresholds, particularly the 10,000 miles, may be cut in the Budget. Last May, HM Revenue and Customs (HMRC) put forward illustrations for possible changes that would have cut the mileage threshold to 6,000 miles. Since then, leading figures in the car leasing industry involved in close discussions with HMRC are predicting a reduction in the 10,000-mile threshold. In May, the Fleet Management Forum 2008 will "hear analysis of the changes to the Approved Mileage Allowance Payments", with speakers including the HMRC's policy advisor Liz O'Donnell.

In December, 60 Welsh volunteer ambulance car drivers went on strike to protest that the 34 pence-per-mile reimbursement they were getting from the local NHS trust failed to meet the cost of running their cars. One driver averages more than 30,000 miles per year. Should the mileage threshold be reduced to below 6,000 miles with payments above that restricted to 25 pence per mile, a volunteer driver who is currently covering 10,000 will lose £360 - on top of the shortfall from current payments that do not reflect the true cost of running a car.

The AA argues that, far from reducing AMAP payments, the payment 40-pence threshold, set in 2002, should be re-assessed to reflect the huge increases in the cost of car fuel since then.

Edmund King, AA president says: "We have written to the Chancellor on this vital issue and discussed it with the Exchequer Secretary to the Treasury. It appears that they are unaware of the devastating impact changes could have on volunteer drivers. These volunteers may not pay tax but, if paid above the Government mileage rates, their insurance is invalidated. We are not convinced that the Government has thought this through.

"Charges that the AMAP system encourages the use of more polluting vehicles are nonsense. The flat-rate 40 pence tax-free maximum barely covers the cost of running a brand new supermini and owners of bigger vehicles lose out because their running costs are greater.

"In addition, the mileages done on business, community services, or voluntary work are in most part governed by the managers not the drivers. Drivers are often bound by contract to use their own cars and, by circumstance such as having children or personal finances, have to use the car they can afford. Blaming them for CO2 emissions and failing to reimburse the true cost of running a car is simply wrong and unfair."

Detrimental changes will undermine morale, as illustrated by a recent survey by the Community and District Nurses Association, and industrial relations. The NHS and small business have benefited greatly from the administratively-simple and cheap AMAP system of mileage allowance. Forcing them to keep their staff mobile on public transport will reduce workload efficiency or push up costs if they have to provide cars for employees.

Notes to Editors

1HM Revenue and Customs' guidance to volunteer drivers on claiming back car expenses.

2A stock letter for volunteers to send to their insurers, undertaking that any reimbursements will not exceed the vehicle's running cost. (this is a word document)

Department for Transport guidance explaining the difference between a private hire vehicle and a "car-share" vehicle not used for profit.

17. It is also possible for vehicles with fewer than nine passenger seats to provide a service involving the carriage of passengers which is neither a PHV nor a small PSV - the vehicle could fall within the rules governing car sharing schemes. The main characteristic of a vehicle which is being used legitimately under the car sharing rules is that the total of any charges should be agreed in advance and must not exceed the running costs (including wear and tear and depreciation) of the vehicle for the journey. In other words, it is a form of transport which is provided by volunteers who do not make a profit from the service.

18. The rules governing car sharing are contained in section 1(4) of the Public Passenger Vehicles Act 1981 ("the 1981 Act").