HC Deb 22 November 1991 vol 199 cc326-7W
Mr. Steen

To ask the Chancellor of the Exchequer what discussions have taken place with volunteer drivers of the hospital car service in Devon regarding taxation of the hospital car service mileage allowance.

Mr. Maude

The position is that motor mileage allowances paid to volunteer drivers who use a car on health service business are liable to tax to the extent that the allowances exceed the costs of running and maintaining the car for the miles travelled for the health service and so result in a profit. Letters have been sent to individual drivers explaining the position and setting out arrangements which will enable drivers, if they wish, to read off the approximate profit figure, if any, from tables calculated by the Inland Revenue. Alternatively, drivers can calculate their taxable profits themselves by reference to the actual mileage payments they receive and their actual expenses.

I understand that the Inland Revenue has not held any formal discussions with volunteer drivers in Devon on this matter, but the letters to which I have referred suggested that drivers should contact their tax offices if they were unclear about their tax position, and I am told that the Inland Revenue has responded to a number of such inquiries.

Mr. Steen

To ask the Chancellor of the Exchequer if he will consider building an exceptional depreciation allowance into the mileage rates applied to the voluntary drivers of the hospital car service.

Mr. Maude

The Inland Revenue's "tax-free" mileage rates already include an allowance for depreciation. These rates are used in a voluntary, administrative arrangement designed by the Inland Revenue to reduce record keeping for health authorities and volunteer drivers, but it is open to drivers to choose to have any profit element in their mileage allowances taxed on the strict statutory basis if they believe the Revenue's "tax-free" rates do not cover their expenses. However, in that case, drivers must keep records of all their motoring costs and miles driven, both privately and for the hospital car service, to enable the actual profit to be calculated and charged to tax in the normal way.