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heeded previous HMRC advice when completing P11D returns in respect of these benefits. This prompted HMRC to suggest that our concerns be fed back to policy colleagues to consider the matter further. We await developments. What mileage rate can I pay to officers using privately owned emergency vehicles? The April 2017 legislative changes have, somewhat ironically, driven employers and officers to consider whether there are better/more tax-effective ways to provide on-call emergency response cover. Although most emergency services organisations have been looking to move away from use of personally owned cars to provided vehicles, there now seems some appetite to reverse this. This has led PSTAX to consider whether ‘AMAPs’ (authorised mileage allowance payments) are the appropriate way to reimburse an officer when driving their emergency vehicle (i.e. one fitted with blues and twos) on business. Our research suggests that the AMAPs legislation does not, in fact, apply to such vehicles since they are not ‘of a type’ that may be used on the roads. So, what are the implications arising from this? Logically, if the average cost of driving a car is considered by HMRC to be 45p per mile (reduced to 25p after 10,000 miles), then the cost attributable to driving an operational vehicle fitted with and carrying heavy equipment, will be considerably more. We are therefore inclined to think that many officers would have a strong case for calculating their individual motoring costs and using this as a basis for claiming tax relief. Where the employer has used the AMAPs rates as a ‘benchmark’ for payment of business mileage, we consider that this would be acceptable to HMRC. However, some employers would have paid, and might still be paying, at rates well below 45p. So, the potential for claiming tax relief could be considerable. This position is in stark contrast to the taxation of cars that are provided to officers for both business and private use. Are there better/more tax- friendly options for the provision of emergency vehicles? As a result of the use-of-assets rule changes, many organisations, particularly fire and rescue services, have started to
apply the emergency vehicle exemption – which dates back to 2003 – to their provided and lease vehicles. ...actual day-to- day commuting becomes ‘permitted use’... The two key conditions that need to be satisfied relate to ‘permitted’ private use in the context of a general prohibition of private use. This is not a contradiction as the law clearly allows for both private use while on call and on-call commuting use. But what do these terms mean? Our extensive discussions with HMRC have informed our view as to the way in which the exemption can work. In relation to ‘freedom of movement’ mileage (as it tends to be known in the fire service), this qualifies as ‘permitted use’ under condition four so long as the officer is on call and able to return to the geographical area within a reasonable timeframe, e.g. sixty minutes. As regards ordinary commuting, HMRC will accept that an officer may have a requirement to attend an emergency even when not on an on-call rota when they have booked on duty while in their official vehicle. Most emergency services now rely on additional cover from officers who are ‘nearest’ to an emergency, and so it is reasonably common for officers using their provided vehicle for an ordinary commuting journey to be diverted elsewhere. So, as a result of having a policy which requires officers potentially to respond while commuting, the actual day-to-day commuting becomes ‘permitted use’ under the terms of the exemption. Although officers who have had unlimited private use of their lease cars might prefer not to ‘sign up’ for the exemption, the financial implications of sticking with their taxable ‘assets’ will, at the very least, provide food for thought. n On a final, and slightly playful, note, I wonder whether HMRC ever considered that emergency vehicles would have been so affected by the new legislation. Perhaps someone at HMRC might even now be pondering whether it would be easier just to amend the ‘company car’ rules so that cars fitted with ‘blues and twos’ are caught by them? Now that would be ‘simplification of tax’ at its most controversial level.
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Issue 39 | April 2018
| Professional in Payroll, Pensions and Reward |
*correct at time of publication
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