§ Mr. WigleyTo ask the Chancellor of the Exchequer if he will seek to amend the law to allow tax exemption for ambulance car volunteers on their mileage allowance.
§ Mr. MaudeThe position in law is that motor mileage allowances paid to individuals, whether employees or volunteers, who use a car on health service business are only liable to income tax if the allowances exceed the cost of running and maintaining the car for health service driving and so result in a profit.
I am not persuaded that there is a case for amending the law to exempt volunteer drivers from tax on any profits on their mileage allowances. But I am aware that there has been some concern about the recent introduction of arrangements for taxing any profit on these allowances.
The introduction of the new arrangements will therefore by phased in gradually over a number of years. Only one quarter of the profit element for the period from 6 October 1991 to 5 April 1992 and for 1992–93 will be taxed; one half of the profit will he taxed for 1993–94; and three quarters of the profit will he taxed for 1994–95. Tax will not be payable on the full amount of the profit element until 1995–96.
The Government greatly appreciate the work done by so many volunteer drivers, as do the communities they serve.
I hope that this gradual phasing-in of the arrangements will meet the concern that has been expressed.