The Government have announced that councillors are no longer going to be taxed for their travel expenses.
The Financial Secretary to the Treasury, David Gauke MP, says in a Written Ministreial Statement:
“The Government is announcing today that it intends to introduce legislation to exempt from income tax and National Insurance contributions (NICs), travel expenses payments made to local councillors.
Local councillors perform a vital but frequently unsung constitutional role working on behalf of local people, often in addition to other professional and personal commitments. They are required to perform their duties in both the communities they serve and their council offices and most receive no payment other than allowances in recognition of the time and expenses they incur.
The Government wants to ensure that nobody is discouraged from representing their local community as a local councillor and therefore intends to introduce this new exemption so that in the future, travel expenses paid to local councillors, including those to cover the costs of journeys to their council offices, are not subject to income tax or NICs.
The Government will provide further details of the exemption, and the time scale for introduction, in the autumn.”
The change seems to me reasonable. My own view is that councillors allowances should be abolished. Councillors should not regard themselves as state employees but as volu nteers – carrying out the honour of taking decisions on behalf of the residents they represent.
But nor should councillors be financially penalised. It is reasonable for them to be paid travel expenses and for this not to be taxed as if it was a sourse of income. It will be relevant to councillors in rural areas who have to travel long distances.
The change follows lobbying by Eric Pickles, against HMRC’s new interpretation of the law – which had caused some understandable dismay.
Councillors should not have allowances. They should certainly not have taxpayer-funded pensions. But f they are driving from home to the council chamber, that is a reasonable expense on council business that they should be able to claim back and not have to pay Nantional Insurance and Income Tax on.