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Facing a
community
transport problem?
CTA Journal can help.
Our problem solver Amanda
Howard is a member of the CTA’s
advice and information team.
Every day the team members field
enquiries from across the UK’s
community transport sector and
have a wealth of knowledge and
experience to draw upon.
My organisation is looking to start
a volunteer car scheme. Can you
confirm the legal status of car sharing
and what the reimbursement rate is
for volunteer drivers?
There are several elements to be aware of
when running a car scheme.
You must make sure you comply with
the legislation which exempts volunteer car
schemes from needing to be licensed in one
shape or form. Then you need to consider
how much a volunteer can be reimbursed
before incurring any tax implications.
There is what insurance companies consider
to be “not-for-profit” reimbursements
for volunteering. And, finally, if your
organisation is VAT-registered you need to
deal with VAT on fares.
Under normal circumstances, the
carriage of passengers for fares is classed
as “hire or reward” and is subject to
either Public Service Vehicle (PSV),
Problem solvers
Hackney Carriage or Private Hire Car
licensing laws. However, car schemes and
car-sharing are specifically exempted from
such requirements by law.
There are many different ways for
car schemes to devise a fare structure
and the simplest way is charge a “pence
per mile” fee, which will usually be the
HMRC’s Approved Mileage Allowance
Payment (AMAP) from and to your
driver’s home to the passenger’s home.
The “dead mileage” as well as the “live”
passenger mileage are therefore paid by
the passenger and received by the driver.
The AMAP rate is intended to be a
tax free rate for amounts that represent
fair reimbursement for car use. This rate
applies to drivers who drive in connection
with their work and drivers who volunteer
their time to car schemes. Thanks to the
CTA and Volunteering England lobbying
for change the government increased the
AMAP rate on 6 April 2011 and mileage
from this date can be reimbursed at the
new rate. Drivers become liable to pay tax
if the income they receive during the tax
year comes to more than the expenses they
incur when driving for their organisation,
in other words, if they make a profit.
The actual mileage rate has now
increased from 40 to 45 pence per mile for
the first 10,000 miles of volunteering and
this reduces to 25 pence per mile thereafter.
The government has also extended
the option of reimbursing a driver an
The Public Passenger Vehicles Act 1981 Section 1 (4) states that
a journey made by a vehicle in the course of which one or more passengers
are carried at separate fares shall not be treated as made in the course of
a business of carrying passengers if
(a) the fare or aggregate of the fares paid in respect of the journey does
not exceed the amount of the running costs of the vehicle for the
journey; and
(b) the arrangements for the payment of fares by the passenger or
passengers so carried were made before the journey began;
and for the purposes of paragraph (a) above the running costs of a
vehicle for a journey shall be taken to include an appropriate amount in
respect of depreciation and general wear.
28 cta journal Summer 2011
additional 5 pence per passenger per mile
for live mileage only. Schemes have the
option to reimburse the driver what they
deem to be fair up to the HMRC rate but
it is a balancing act between an amount
that the volunteer driver feels is acceptable
and not charging the passenger more than
they can afford – remember that this is the
first increase in the AMAP since 2002/03.
Reimbursing the driver up to 45 pence
per mile should not cause a problem with
the volunteer’s insurance company or the
law because the view would be that is
clearly now established as the “running
costs of the vehicle” as required by the
legislation. This should also be the case
with the additional 5 pence per passenger
mile, although it is possible that this might
not be accepted by all insurers. The CTA is
currently in discussion with the Association
of British Insurers and the government
and, until the full legal impact has been
clarified, we suggest to community car
schemes that they temporarily do not use
this additional allowance. The CTA has
already emphasised the need to clarify this
point in a submission to the government’s
red tape challenge team. When we have
resolved these issues, we will publish a
definitive guide.
If your organisation also operates
minibuses it is probably VAT registered
and so if you invoice the car scheme
passengers for their travel then the
invoice must include VAT. VAT would
not be applicable where the organisation
acts solely as a contact point to match
passenger to driver and the driver takes
complete responsibility for the expenses
paid to them by the passenger.
For FAQs for Community Car
Schemes and other Advice Leaflets
see the Advice & Information section
of the CTA website www.ctauk.org