§ Mr. Bill WalkerTo ask the Secretary of State for Scotland if he will make a statement on the effect of the decision by the Inland Revenue to tax the profit element of the motor car mileage allowances paid to the voluntary car drivers used by the Scottish Ambulance Service.
§ Mr. Michael ForsythWe greatly appreciate the work undertaken by the voluntary car drivers and the contribution which they make to the community.
The Inland Revenue's decision mainly affects those volunteer drivers who exceed 4,000 miles per year who will be liable for income tax on the profit element of their mileage allowance. The new tax arrangements will be phased in gradually over a number of years. Only one quarter of the profit element for the period 6 October 1991 to 5 April 1992 and for 1992–93 will be taxed, one half for 1993–94 and three-quarters for 1994–95. Tax will therefore not be payable on the full amount of the profit element until 1995–96.
I have, however, agreed that mileage allowances for voluntary car drivers should be substantially increased. The new rates are:
- 27.7p per mile for motor vehicles up to 1500cc and
- 33.2p per mile for motor vehicles over 1500cc.
This represents an increase of nearly 10 per cent. These rates will be kept under review and are backdated to 1 October 1991.