As councils complain that they are cash-strapped, the TaxPayers' Alliance has discovered that £427 million was paid out in mileage allowances in 2009-10. Many of those councils paid up to 65p a mile to staff using their cars.
Of course most drivers can claim a tax free allowance from their employers if they use their car for work, but many council employees are receiving well in excess of the HMRC approved rate. In the latest Budget this rate was raised from 40p per mile to 45p per mile (with effect from 6 April).
Motorists are one of the most overtaxed groups in the UK and with eye-wateringly high fuel bills many taxpayers will be angry that they are subsidising council staff to claim 25p a mile more than most ordinary private sector workers get.
The key findings of this report are:
- £427 million was paid out in mileage allowances in 2009-10 by councils to staff, compared to £402 million in 2008-09.
- Lancashire paid out the most in mileage allowance payments in 2009-10 – a total of nearly £8.8 million.
- 80 per cent of councils paid above the HMRC approved rate of 40p per mile. The average council rate was 56.45p per mile in 2010-11. Only 80 councils paid the HMRC rate of 40p in 2010-11
- In 2010-11 a driver claiming for 250 miles at the average council rate would be £41.13 better off than someone paid the HMRC rate
- For 500 miles, a driver paid the average council rate would be £82.26 better off
- For 1,000 miles, a driver paid the average council rate would be £164.52 better off
Matthew Sinclair, Director of the Taxpayers' Alliance, said:
“It is shocking that the same councils that are pleading poverty are paying well above the recommended mileage rate. This extra cost on all those journeys makes up a large part of the half a billion pound bill for taxpayers. Ordinary motorists who are feeling the pinch will be shocked that council staff are getting such a generous deal for their mileage claims, it simply isn’t fair. Some authorities have shown that it is possible to save millions by cutting back to the rate recommended by the taxman. This is a quick and painless saving that won’t affect council services and will ease the burden on households, who’ve seen Council Tax double in the last decade.”