Kitty
Ussher: I welcome the fact that the hon. Gentleman has
tabled a probing new clause in such an important area. He is right that
we issued a consultation response in March this year containing several
proposals to make things easier and raise awareness of the gift aid
scheme, which has been welcomed thoroughly by the charitable sector. We
also say in the document that there are complex issues around the way
in which the gift aid system works. A number of points have been made
about how the mechanics of the system could be altered to make it
easier for some donors to give, and we continue to research the
issue.
I have worries
about the new clause because a specific solution would raise some
concerns among the charitable sector. By ending the tax relief system,
it could make charity income streams more dependent on Government
spending, which may raise concerns. More work needs to be done on the
whole matter of donor behaviour. We would not want to signal that we
were necessarily considering one particular solution without
understanding fully the effect of that signal on the market, so we
resist the new clause because it would be doing precisely that. It
would signal specifically a particular avenue that we wanted to travel
down, while we are still at the stage of undertaking broader
research.
Mr.
Hammond: I am grateful to the Minister for at least
confirming that the Government are doing more work in such areas. She
expressed concern that such a measure might increase the charitable
sector’s dependence on Government income. I stressed in my
remarks that that is not our purpose. We see it the other way: we have
to reinforce the donor base to allow charities to feel confident that
they can tender for Government contracts and deliver public services to
Government bodies, without compromising their independence and their
essential ethos. I know, as she will from talking to charities, that
one of their worries is that if they take the Government
shilling—although it is welcome at the time and allows them to
participate in new areas—they run the risk of sacrificing some
independence. It is precisely to avoid that situation that we want to
explore possibilities in the area. However, I am happy that the hon.
Lady has said that she is open to the idea, among others, and will
undertake further research into the matter. I beg to ask leave to
withdraw the
motion. Motion
and clause, by leave,
withdrawn.
New
Clause
22Mileage
allowance payments ‘(1) ITEPA
2003 is amended as follows. (2)
In section 229, at end
insert— “(5)
Mileage allowances are to be treated as approved if they are
paid— (a) otherwise than
in connection with an office or
employment; (b) to someone who
is not employed by the payer or an associate of the payer;
and (c) for less than 10,000
miles in any one
year.”. (3) In section
230, at end
insert— “(7) The
Treasury shall publish annually a report setting out its assessment of
the impact of the rates in subsection (2) on the level of participation
of volunteers in community transport
schemes.”’.—[Mr.
Breed.] Brought
up, and read the First
time.
The
Chairman: I am happy to call Colin Breed, who has been
very
patient. Mr.
Colin Breed (South-East Cornwall) (LD): I beg to move,
That the clause be read a Second
time. The
purpose of the new clause is to prompt an annual review of the mileage
allowance, the rates for which are contained in the Income Tax
(Earnings and Pensions) Act 2003. I suppose that most members of
the Committee know that the current rates for a car or van are 40p per
mile for the first 10,000 miles and 25p per mile thereafter. Under
section 230(6) of the Act, the Treasury can alter the rates by
regulation, but the 40p rate has been static since
2002-03. The
background to the debate is a matter that I raised with the Chancellor
personally at a sitting of a recent Treasury Committee and, to some
alarm, I found him reasonably sympathetic. He had actually received a
letter on the same issue from a constituent who had referred to the
effect of increasing fuel prices on the mileage rates for volunteer
drivers. Those who operate within organised volunteer car schemes can
claim mileage allowances that only incur tax if they make a profit
through claiming expenses in the tax year. The HMRC guidance states
that the tax-free mileage allowances are intended to give tax relief
for amounts that represent fair reimbursement for car use. However, it
has become patently obvious that in many parts of the country
volunteers are finding it almost impossible to volunteer their services
and provide car transport, owing to fuel
costs. 8.45
pm To
give some idea of the scale, in Cornwall, about 5,000 trips per week
are undertaken by volunteer car drivers using their own cars and
claiming mileage, and about 75 per cent. of rural parishes have no
daily bus service and no community transport scheme. Many people rely
upon non-emergency patient transport services provided by groups, such
as Help the Aged, the Red Cross, St. John Ambulance and Age Concern,
all of which enable people to access important services, such as
hospitals and doctors, and to get into town. The problem before us has
come about very recently owing to increased fuel costs, and many
volunteers are now leaving services, which are finding it almost
impossible to provide the transport for those who require
it. If
a volunteer receives payment above the 40p and 25p thresholds, their
status changes from volunteer to car hire operator, which makes them
liable for income tax. Furthermore, the AA has indicated that it
believes that it could invalidate motor insurance for voluntary workers
under the Public Passenger Vehicles Act 1981, so even if the rates were
raised in order to keep people volunteering, their insurance could be
invalidated and their status changed.
I do not want
to go through all the fuel figures and everything else—we are
all aware of them—but the main thrust of my argument is quite
clear. The Community Transport Association has called on the Government
to consider fair reimbursement to volunteers in the light of what it
considers to be outdated regulations. In a recent survey, it found that
55 per cent. of organisations attributed the loss of volunteer drivers
to high fuel costs. That is happening now and everyday, and in many
parts of the country volunteer drivers are relied upon more and more.
If we cannot stop them leaving the service and providing essential
transport to places such as hospitals, doctors and clinics, we will
have a major
problem. New
clause 22 would amend the Income Tax (Earnings and Pensions) Act 2003
and has two clear parts: the first explicitly acknowledges the right to
mileage allowances of volunteer drivers. Section 229(2) of the Act
permits mileage allowance payments to be provided to colleagues
in reference to business travel, but does not explicitly reference
volunteers, which we think that it should. The statute should protect
their rights to claim those mileage allowances. The second
part—subsection (3)—would require the Government to
undertake a review of the impact of the current 40p and 25p rates on
participation in volunteer transport schemes. We have a crisis, and we
cannot wait much longer. We are losing huge numbers of volunteers all
over the country, and many people are finding it extremely difficult to
access public
services. Justine
Greening: I was very interested in the hon.
Gentleman’s comments, and we support him, but volunteer drivers
are important in not only rural areas, but urban areas. In modern day
Britain, families are increasingly fragmented, for all sorts of
reasons, and therefore as people grow older they become dependent on
networks of volunteers to enable them to retain their independence. So
we have a great deal of sympathy with his aims, and if he pressed it to
a Division, we would support it. There is no doubt that, in line with
what he has just said, there are some rapidly rising costs of motoring
across the board. We need to take care to ensure that we understand how
that affects these key groups of people, who are perhaps most
susceptible to changing their decisions about whether or not to drive
as a result of increased motoring costs. There could be a much more
disproportionately negative impact on our communities as a whole than
on people’s individual circumstances.
I do not
believe that he mentioned the figures, but the AA’s estimation
of the average cost of motoring per mile is now around 58p. I am sure
he is aware that only several months ago, people could buy a litre of
petrol for mid-80p per litre. The last time I filled my car up on
Sunday, I ended up paying £1.17. There is clearly an issue in
relation to understanding the Treasury’s assessment of how the
rates of mileage allowance impact on people’s behaviour in the
context of rising fuel prices. I fully support what he is trying to
achieve and will wait with interest to hear what the Minister has to
say.
Angela
Eagle: The new clause would add an additional but
unnecessary statutory definition to the scope of the approved mileage
allowance payments in section 229 of the Income Tax (Earnings and
Pensions) Act 2003. My understanding of the intention behind the clause
is that it is to ensure that people involved in voluntary work that
directly involves the use of their own vehicle are eligible for
reimbursement of their motoring expenses without fear of being subject
to
taxation. The
new clause would impose an obligation on the Treasury to publish an
annual report assessing the impact of the mileage rates on the numbers
of volunteers participating in community transport schemes. Let me make
it clear that the Government have never wished to intervene in the
reimbursement of such people. Of course, we greatly value the work of
volunteers, but the new clause appears to suggest that the Government
are somehow deficient in their policy on reimbursement payments to
volunteers. Let me clarify the matter: it is right and proper that
those who freely give their time and vehicle over to voluntary work
should be able to reclaim their motoring expenses for the miles used.
For that reason, volunteers are not taxable on amounts they receive if
those amounts just cover their reasonable expenses. They can be
reimbursed for their actual costs
of driving with no tax consequences whatsoever—and that is beyond
the level specified by the additional mileage allowance
payments. If
it can be shown that someone’s expenses go beyond that, there
should be no impact on the level of participation of volunteers in
community transport schemes and no reason to publish a report. The
existing approved mileage allowance payments rates can be used by
voluntary organisations if they estimate their costs to be below the
AMAPs rate. Without the need to put this clause on the statute book,
that is already accepted by HMRC. The new clause would not serve any
useful purpose. For a start, it would be included in the Income Tax
(Earnings and Pensions) Act 2003, which relates solely to employment,
pension and social security income. Including a clause that relates to
the self-employed and volunteers in the Bill would be extremely
odd. The
new clause is flawed because, as it stands, it would deny both
self-employed people and volunteer drivers the option they currently
have to claim the actual expenses that they incur as an alternative to
using the mileage rates as an approximation. The new clause does not
define the amount of mileage allowances that are approved and would
affect only the first 10,000 business miles. The new clause is silent
on what would happen if miles above 10,000 were used for the purpose of
volunteering. The
hon. Gentleman is right to reflect the concern about high fuel prices
and reimbursement, but he perhaps did not consider in his contribution
that volunteers—I will repeat this point again—are
entitled to claim their actual motoring costs, if they so wish. To do
so, volunteers merely have to collect the information about the mileage
they have spent and the costs they have incurred. If they do that, HMRC
will not tax them on reimbursements—as long as they do not make
a profit on the money that they claim back. Once there is a reward of
that sort and it is above the mileage allowance in AMAPs, they would
have to pay income tax on that amount. However, people do have an
option; they can use the AMAPs scheme or they can be reimbursed with no
tax consequences for their actual expenditure. With that explanation, I
hope that the hon. Gentleman will see fit to withdraw the
motion.
Mr.
Breed: It seems quite remarkable that we even bother with
a 40p rate if everybody can just claim for whatever they need to be
reimbursed.
Mr.
Hammond: Perhaps the hon. Gentleman might probe the
Minister about the detailed record keeping and paperwork that is
involved in a self-assessment income tax return to claim at a rate
higher than that permitted by
HMRC.
Mr.
Breed: I am grateful to the hon. Gentleman. That was my
second point. I was going to say first that a significant number of
organisations, many of them Government agencies, do not allow their
volunteers to claim more than 40p a mile, whether or not they want to
keep and submit all of the things required in the paperwork. We are
talking about some quite elderly people who are doing this for
retirement jobs. It would be difficult for them to demonstrate to HMRC
that they are being properly reimbursed, even if they could. The vast
majority have no chance to put in a claim that exceeds the permitted
40p. That is why they are leaving.
If the
Government are perfectly content with their current guidance and think
that everything is okay, they will have one hell of a fight on their
hands once again. If they ignore this and volunteers disappear out of
the door, leaving people in their homes because they cannot get to
hospitals and clinics, it will be the fault not of the volunteers, the
health centres or the hospitals, but of the Government because they can
see precisely where the responsibility lies. If the Government are
happy not to change this by the time we get to Report stage, they will
have only themselves to
blame. I
am happy to use this as a probing motion and to withdraw it, but I hope
that the Government recognise my point. I felt that the Chancellor
responded more positively in the Treasury Committee than the Exchequer
Secretary has today. I think that the Government should look at this
issue again very quickly. I beg to ask leave to withdraw the
motion. Motion
and clause, by leave,
withdrawn.
New
Clause
23Bingo ‘The
Treasury shall, before the publication of the 2008 Pre-Budget Report,
prepare and lay before the House of Commons a report on the impact of
the double taxation of bingo
on— (a) the
competitiveness of licensed bingo clubs,
and (b) the level of social
access of individuals aged over 65.’.—[Mr.
Breed.] Brought
up, and read the First
time.
Mr.
Breed: I beg to move, That the clause be read a Second
time. The
new clause is fairly simple. It should be possible to sort out the
provision within days. Quite remarkably, the Exchequer Secretary
responded almost precisely to what I sought with the new clause in a
written answer to a question from the hon. Member for Gravesham
(Mr. Holloway)
yesterday. The
purpose of the new clause was to sort out once and for all the
assessment of taxation on bingo. On one hand, we are told by the Bingo
Association and others that unlike casinos and betting shops, bingo is
the victim of double taxation, with VAT payable at 17.5 per cent. and a
gross profits tax at 15 per cent. We are told that that is
significantly affecting businesses; clubs are closing, profits are
going down and even the tax take for the Government is going
down. On
the other hand, the Exchequer Secretary wrote
yesterday: “The
Government’s assessment that tax is not at the root of the bingo
industry’s problems is based on evidence from a number of
sources, including data on the number of bingo clubs and on bingo
stakes, commercial sector reports on the bingo industry, and
representations from the bingo industry. The assessment noted the need
for the bingo industry to adapt to the smoke free legislation and the
impact of the implementation of the Gambling Act 2005. It concluded
that the industry’s problems are a product of a combination of
factors including greater competition in the leisure sector and
changing tastes in leisure activities.”—[Official
Report, 18 June 2008; Vol. 477, c.
990W.] All
that we now seek through the new clause is for the Government to
produce that evidence in a full report so that we can all analyse the
various representations and
judge for ourselves whether the Government’s assessment is
correct. The new clause would require the Treasury to produce a report
before the next pre-Budget report. Given that the assessment has
already been made, presumably it will be able to produce the report
sooner. I will be very pleased to see
it. 9
pm
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