Councils wasting millions by offering excessive mileage allowance payments

October 24, 2017 9:07 AM

New research by the TaxPayers' Alliance reveals that councils are paying their staff millions more than they should be in mileage allowance payments.

Employees who use their own vehicles for business journeys are often reimbursed with mileage allowance payments by their employers to cover the cost of using the vehicle. HMRC sets an approved amount for cars and vans: 45p for first 10,000 miles.

The TPA first exposed this needless waste of taxpayers' money back in 2011, and some councils have shown that reducing their mileage payments to the approved rate is an easy way of saving money without affecting frontline services. However, too many still pay more than they should, costing taxpayers millions.

The Department for Communities and Local Government first advised councils to stop paying above HMRC's approved rate five years ago.

This research has the figures for every council in England, Scotland and Wales, including the overall amounts spent on mileage payments and the rates paid.


John O'Connell, Chief Executive of the TaxPayers' Alliance, said:

"Driving is extremely expensive in Britain thanks to sky-high rates of fuel duty and vehicle excise duty, but there's no excuse for councils to pay more than HMRC's approved rate for mileage. It's simply not credible for local authorities to plead poverty and raise council tax while paying over the odds for basic expenses, especially when the government has been telling them to rein in these payments for the past five years."

  • Local authorities made £223 million in mileage allowance payments to their employees in 2016-17.
  • The average council rate was 48.92 pence in 2016-17 - 3.92 pence higher than the HMRC approved rate.
  • Bassetlaw paid the highest rate at 69 pence per mile, over 50 per cent more than the HMRC approved rate.
  • Compared to an employee paid the approved rate, a Bassetlaw council employee is: £240 better off over 1,000 miles.
  • Lincolnshire council paid out the most – £6.9 million – in mileage allowance payments in 2016-17.
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