Councillors' remuneration, allowances and expenses: guidance

ALLOWANCES AND REIMBURSEMENT OF EXPENSES

25. This guidance relates to the reimbursement of expenses incurred by councillors in carrying out council business as specified in the Regulations http://www.opsi.gov.uk/legislation/scotland/ssi2007/ssi_20070108_en_1. It includes situations where the Council itself purchases places for members at a conference or for part attendance at a conference or where the Council would, in any event, consider it reasonable to offer lunch to all those attending any particular meeting. When claiming reimbursement, councillors are required to declare that their claims are for approved council business and relate to associated costs incurred by them. It will be for councils themselves to decide whether claims made by their councillors are reasonable and should be reimbursed. An initial view has also been sought from HM Revenue and Customs as to what elements of the allowance and expenses package may be subject to income tax. It will be for authorities, however, to discuss particular issues of concern on tax and national insurance liability with HM Revenue and Customs.

26. Travel and subsistence expenses may be claimed for approved duties (as defined in Section 49 of the Local Government (Scotland) Act 1973) http://www.opsi.gov.uk/acts/acts1973/pdf/ukpga_19730065_en.pdf. For the majority of instances of expenditure, councillors will be required to produce a receipt. Approved duties are defined as:

• Attendance at a meeting of the local authority or any of its committees or sub-committees
• The carrying out of any other duty approved by the local authority, or anything of a class so approved for the purposes of, or in connection with, the discharge of functions of the local authority or any of its committees or sub-committees
• The performing of any duty as a member of any other body, prescribed by the Scottish Ministers for the purpose, to which the councillor has been appointed by the local authority.

27. For the purposes of calculating claims, a councillor's normal place of residence (his/her home) is regarded as his or her normal place of work, so expenses associated with travel from home to the council headquarters, and other locations to conduct council business, may be claimed back. Where a councillor travels on council business from his or her employment or business (which is not council related) he or she may be reimbursed for the cost of the journey. However, if the cost of making this journey would have been lower had it started from the councillor's home, then that lower cost is the maximum amount which should be reimbursed. For example if the distance from a councillor's home to council offices is 5 miles and from a councillor's business to council offices is 10 miles, a maximum of 5 miles may be reimbursed.

Allowances

28. Three allowances are available under the Regulations:

• Mileage (car, van, motorcycle, bicycle)
• Mileage (boat) for certain islands councillors
• Members choosing to stay overnight with friends rather than stay in a hotel.

These allowances are prescribed in the Regulations.

Mileage allowance (car, van, motorcycle, bicycle)

29. Councillors may claim costs incurred when travelling by private car or van, motorcycle and bicycle, on approved duties, and may also claim costs for travelling with passengers where both the councillor and the passenger are carrying out any approved duties. These rates, which are mandatory, are:

• 40p per mile for travel by car or van
• 24p per mile for travel by motorcycle
• 20p per mile for travel by bicycle
• 5p per passenger per mile where both the passenger and the councillor are carrying out any approved duties.

30. The mileage allowance is intended to reimburse members for the mileage travelled where they choose to travel by car etc. The main point is that it is incurred on approved council related business and the claim for reimbursement is made by the elected member. Provided the authority is satisfied that these conditions have been met, it should not matter whether the member is the car driver or a third party is driving. In instances where a third party is driving the member on council business, the member should amend the claim form declaration to say that the driver holds a current licence and the necessary insurance rather than declaring that he/she holds a driving licence and insurance. It is for councils to determine whether a particular claim is reasonable.

31. HMRC rates for travel by car or van are tax free for the first 10,000 miles travelled in any tax year (6 April to 5 April) and 25p for each mile over 10,000 travelled in a tax year. Mileage above 10,000 miles (and paid at 40p per mile) would therefore be taxable and need to be declared.

Mileage allowance (boat)

32. Where there is no direct ferry service and where the Council agrees that it is not reasonable for members to charter a boat and claim re-imbursement of receipted expenditure, members of Orkney Islands Council, Shetland Islands Council and Comhairle nan Eilean Siar may claim £2 per nautical mile, where they use their own boat, for travel between islands in their own local authority area, to enable them to undertake approved council business. An allowance of 25p per passenger per nautical mile may also be claimed where both the passenger and the member are travelling in the same boat and are undertaking approved duties.

33. Members claiming this allowance must also have adequate insurance cover for business purposes.

Staying with family or friends allowance

34. Councillors may choose to stay overnight with family or friends instead of claiming overnight subsistence (bed and breakfast). In such cases, councils may pay an allowance of £25 per night if they consider the expense has been reasonably incurred by the councillor on approved council business. Councillors making such a claim should include the name(s) and address of the friends or family with whom they have stayed.

35. Councils should publish any costs associated with a councillor's claim to stay with family or friends but should not publish details of the name or address of the person with whom the councillor was staying. These costs should be included under the column headed "Other Allowances and Other Expenses."

36. HMRC's view is that this allowance is taxable and would need to be declared.

Reimbursement of Expenses

Travel

Travel by Private Transport

37. In addition to the mileage allowance covered in paragraphs 29 to 33 above, Councillors can also claim the following costs associated with travelling by private car, motorcycle or bicycle:

• Parking charges - receipted costs of expenses incurred
• Road and bridge tolls (if appropriate) - costs of expenses incurred
• Road pricing/congestion charging - receipted costs of expenses incurred
• Ferry fares for car, motorcycle or bicycle - receipted costs of expenses incurred.

38. Parking fines or tow-away costs will not be reimbursed.

39. Councillors in Orkney Islands Council, Shetland Islands Council and Comhairle nan Eilean Siar may claim re-imbursement of receipted expenditure incurred where they charter a boat to enable them to travel between islands, in their own local authority area, for undertaking approved council business. This is only permitted where there is no direct ferry service between those islands.

Travel by Public Transport

40. The following expenses may be claimed back by councillors who use public transport to carry out their duties:

• Buses and trams - expenses incurred, including season ticket/passes where this is considered more cost effective
• Taxis, trains, air travel, ferry travel - receipted cost of fare.

41. It is expected that councillors should travel by standard/economy class for the vast majority of their journeys. Councillors and local authorities should consider cost effectiveness and value for money when choosing the mode and class of transport for a journey on council business. Councils may offer season tickets or reimburse the cost of season tickets to their members where they consider it more cost effective to do so. Any such costs should be recorded as a cost to the relevant councillor and published annually on the Council's website.

Subsistence

Expenses Incurred for Meals and Overnight Accommodation

42. Councillors may be entitled to claim back the actual costs incurred for meals and overnight accommodation when they are carrying out council business away from their home or away from council premises.

Overnight Subsistence (bed and breakfast)

43. Councillors in all wards may be reimbursed the actual receipted costs for overnight accommodation up to the maximum rate in ANNEX D. The overnight reimbursement covers the cost of bed and breakfast whether accommodation is booked on a 'room only' or 'bed and breakfast' basis. Costs up to:

• a maximum of £131 for London and
• £110 elsewhere in the UK

may be reimbursed on production of a receipt. Under normal circumstances such bookings and payments should be made by the councillors themselves. However, where several councillors are attending an event and Councils can demonstrate best value would be achieved, they may choose exceptionally to book accommodation on behalf of members. The costs should normally be within the maximum rate allowed in the regulations. (As indicated in paragraphs 34 and 35 above, councillors have an option to choose to stay with friends or family instead of staying in a hotel).

Meals

44. Councillors in those wards listed in ANNEX D which comprise a combination of mainland and island communities, or those which cover a large geographical area, may be reimbursed the receipted costs of meals within their wards or whilst working within council premises. In these circumstances, the authority would need to consider such costs as having been reasonably incurred and required to enable the councillor effectively to carry out an approved duty.

45. In all other circumstances, expenditure on meals should not be reimbursed where a councillor is carrying out council business in his or her own ward or is working in council premises within the council of which he/she is a member i.e. no reimbursement should be made where a councillor is working in council premises and leaves for a short time to purchase a snack or meal.

46. Where a Councillor is required to carry out council business outwith his or her own ward, or to work outwith council premises, whether or not he/she is claiming an allowance for staying with friends or family, the actual receipted cost of reasonable expenses is as follows:

• lunch - up to a maximum of £12
• dinner - up to a maximum of £25

47. In addition, where a Councillor is required to carry out council business outwith his or her own ward, or is working outwith council premises, it may be possible for him/her to claim reimbursement of actual receipted costs for:

• breakfast - up to a maximum of £8

Where he/she is not claiming overnight subsistence or an allowance for staying with friends and where he/she has needed to purchase breakfaste.g. where they have to travel some distance at an unreasonable hour to attend a meeting and stop to purchase breakfast en route. HM Revenue and Customs have advised that reimbursement of breakfast costs, which is not covered by overnight subsistence, might be taxable and would need to be declared.

48. Reimbursement of breakfast costs cannot be claimed in addition to overnight subsistence since it is included in the maximum subsistence for overnight absence from home.

49. There may be an occasion when a council meeting may start in the morning and continue into the afternoon ( e.g. 10am to 3pm) where councils choose to provide a working lunch. However, these occasions should be exceptional. In such circumstances no claims for reimbursement should be made by the councillors attending the meeting.

Conferences

50. There will be occasions when councillors will be required to attend conferences where either the conference cost is a package including accommodation or one where accommodation costs cannot be readily identified. It is reasonable that these costs are met by the Council. Accommodation costs, where these are identified, should normally be within the maximum limits set for bed and breakfast, lunch and dinner. Information on how these costs should be published is given in paragraph 68.

51. There may be exceptional circumstances where a councillor may be attending a conference and staying at the conference hotel for part of the time which could mean that the accommodation cost may be higher than the recommended maximum. In such instances the Council should decide, before any booking is made, if the cost is reasonable and could be justified as such to their auditors. The councillor should also be made aware before the booking is made whether he or she will be required to fund any of the cost. These instances should, however, be the exception rather than the rule.

Overseas Travel and Accommodation

52. Overseas travel and accommodation are not covered by the Allowances and Expenses Regulations but Councils have asked for some guidance as to how these might be treated. We would recommend that for journeys in Europe, economy class should be used where possible. The next higher class (normally business class) may also be considered in certain circumstances. This would normally be when it was not cost effective to book economy flights, perhaps because of restrictions on bookings or in the case of short-term visits. Also in cases where a councillor necessarily travels for official reasons in company with a person who is not a councillor but who is travelling in a higher class, then business class travel may be considered. Where long haul journeys are being undertaken, e.g. to the USA or Far East, business class travel may be permitted.

53. We would recommend that Councils should use the UK rates for accommodation costs for bed and breakfast and meals as a guide to determine what costs might be reasonable for foreign travel. They would also wish to take into account the "cost of living" of the area(s) being visited. In making these considerations, Councils should always consider cost implications and value for money.

Civic Head

54. In addition to the Civic Head's salary, a local authority may re-imburse actual and receipted expenditure incurred by the Civic Head, or any other member deputising for the Civic Head in carrying out his or her civic duties. This is separate from entitlement to be reimbursed for travel and subsistence costs. The Civic Head's expenses are subject to the following total yearly amount, as a maximum, depending on the banding of the local authority and are only payable to the Civic Head or a councillor deputising for him or her. The year, for these purposes, runs from the date of the election for 12 months ( i.e. May to May), and the sum available is the total amount which may be re-imbursed in any year, even if the Civic Head changes during that time.

• Band A - £2,000
• Band B - £3,000
• Band C - £4,000
• Band D - £5,000.

55. It is for councils to decide what a legitimate use of these funds might be. For guidance funds may be used for example for:

• Any additional necessary purchase or hire of clothes to attend civic functions; or
• Any visits where the Civic Head, or a councillor deputising for the Civic Head, would like to return hospitality to his/her host, by purchasing, for example, a meal for them. Such visits may, for example, be twinning arrangements or other international events attended by the Civic Head or a councillor deputising for him/her, or
• Personal hospitality and other approved costs associated with holding office.

56. Claims for re-imbursement must be receipted.

57. HM Revenue and Customs have indicated that they consider the re-imbursement of receipted expenditure incurred by the Civic Head or his/her deputes to enable them to carry out their civic duties should be subject to PAYE, unless the particular council can satisfy HMRC that the Civic Head is likely to incur tax deductible expenditure up to a specified amount. Even if they can reach agreement, all such expenditure should be reported to HMRC.

Telephone and Computer Expenses

58. Councils should continue to provide equipment necessary such as mobile phones, PC equipment and fax machines to allow councillors to carry out their role. Councillors should not be reimbursed for purchasing such equipment. Councillors may be reimbursed for reasonable peripheral costs e.g. printer cartridges/ribbons. It is expected that authorities themselves would supply any stationery, CDs, memory sticks etc. Any additional telephone costs necessarily incurred to allow councillors to carry out their role effectively may be reimbursed, i.e. provision and rental of a second telephone line.

59. Councillors may be reimbursed for the cost of itemised business calls made on their home telephone, networked PC, fax machine or personal mobile phone. They may also be reimbursed up to 50% of line rental where a councillor uses a personal phone for business use. HM Revenue and Customs believe that a line rental used for personal and business use may be subject to tax.

60. It is open to authorities to decide whether it would be more cost effective to supply their members with any relevant telephones and broadband facilities, including mobile phones and blackberries or similar equipment, to enable them to carry out their Council business. Any personal calls should be identified and paid for by the councillor. Information on how these costs should be published is given at paragraph 68.

Joint Boards

61. Primary legislation would be required to extend all provisions to Joint Boards. However, as their membership consists of a number of councillors it is expected that joint boards will, in deciding what expenses and allowances to reimburse, take account of these provisions in relation to claims and reimburse receipted expenditure where appropriate.

Standard Form for Claims

62. Councillors will be required to complete a standard form for claims for reimbursement of travel, subsistence and expense costs. Councils may introduce drop down menus in the columns relating to Subsistence to show whether expenditure is for meals or accommodation; Other Travel etc to show whether mode of transport is rail, bus etc. The form which they are required to complete can be found at ANNEX E.

63. Each element of reimbursement claimed should be unique. Councillors may not claim reimbursement for the same expense more than once.

64. Details of the time of arrival and departure should be completed in all claims for overnight subsistence, staying with friends or family and meals but need not be necessary where a claim relates only to travel costs. It would be for councils to decide whether they would wish councillors to provide that degree of information on travel claims.

Scrutiny

65. Councils should treat councillors' claims in the same way as those from staff, and satisfy themselves that the checks and balances built into their systems are sufficiently robust to stand up to external scrutiny.