9 July 2008
Defining the issue
Volunteering England's Information Service has recently noted an increase in enquiries about the mileage rates, and we understand that it is an issue of concern for particular groups of our members, specifically those which operate driving schemes, but also those who reimburse volunteers for car usage when travelling to and from their volunteering activity. We have been following this issue closely for the past few months, and been in discussions with HM Revenue and Customs (HMRC), the AA and the Community Transport Association about the situation.
As part of our discussions with HMRC, we have highlighted the significant number of volunteers who use these rates as a basis for simple calculations, and that some volunteers now feel 'out of pocket' when reimbursed with the current rates. We understand that although the rate was recently reviewed prior to the Budget 2008 it has not been increased since 2002 and these higher driving costs are creating yet another barrier to volunteering, by discouraging volunteers who feel unable to afford to support vulnerable people in their communities.
The implications
If organisations give higher reimbursement than the rate published by HM Revenue and Customs, volunteers will have to keep tax records. If a profit is made, insurance cover could be affected or the volunteer may actually be entitled to the legal status of a ‘worker’ and associated employment rights.
The HMRC has indicated that there are no plans to review the rates at present, but suggests that volunteer drivers can refer to a guidance page on the HMRC website. The guidance explains an alternative method for calculating costs and reimbursement, so that anyone who can prove their costs are higher than 40p per mile can claim a full reimbursement.
While this HMRC guidance is helpful, Volunteering England believes that the guidance could be improved to make it more user-friendly and highlight some of the insurance and taxation issues around using this alternative method. HMRC has recently agreed to work with Volunteering England and invited our input to update the guidance over the summer. In the meantime, we have published an information sheet about volunteer travel expenses.
Recommendations for action
Volunteering England supports the Volunteering Compact Code of Good Practice undertaking that "volunteers are entitled to reimbursement of all reasonable expenses and volunteers should be entitled to claim".
To help ensure that volunteers can claim accurate and legitimate expenses through a simple method, Volunteering England would like HMRC
- to implement a more detailed review of the current rates following increased fuel costs.
- to consult fully on the implications for volunteer drivers as a particular group of drivers who use the rates.
- to update its guidance to show how insurance, tax, employment or other legal issues could be affected if drivers receive a payment which is higher than reimbursement of actual expenses incurred. (Volunteering England would be pleased to provide input on these issues as part of its current liaison work with HMRC.)
For any further developments on this issue, Volunteering England will publish updates in the policy section of our website and inform our members via the regular e-newsletter and magazine.
Or please feel free to get in touch and email our policy team
