Eligible staff can claim for all work-related travel, except the commute between home and work.

Context

For many years, NHS staff have told us that using their own car for work is becoming increasingly expensive. The current system for reimbursing mileage is broken. Current reimbursement rates are based on AA data, which up until 2014 was based on the full cost of motoring. After 2014, the AA stopped publishing this data, and the NHS mechanism reverted to using fuel prices only to adjust rates. This means costs such as MOT, servicing, tyres, and insurance have not been considered.

As a result, mileage rates have fallen behind the true cost of using your own car for work purposes. The RCN and NHS trade unions have pushed for change, and after negotiations, a new mechanism is being proposed.

Here are some frequently asked questions.

This is contained in Section 17 of the NHS Terms and Conditions Handbook, commonly referred to as Agenda for Change. This mechanism has been broken since 2014 and the RCN has campaigned to get it updated so that it more accurately takes into account the costs of motoring.

The mileage you can claim will depend on your contractual work base. This is normally specified in your contract of employment. You can claim for mileage you need to undertake to do your job. However, you can’t claim for home to work mileage unless your contractual work base is your home.

Section 17 is a national term in the NHS Handbook; however, local agreements can be negotiated in partnership to improve it. Northern Ireland, Scotland and Wales all have local agreements in place that will remain in place until discussions have taken place at devolved administrations level.

Most miles are reimbursed under Section 17. However, whilst the broken mechanism was in place, some trusts may have agreed local variations or put in place HMRC’s Approved Mileage Allowance Payment (AMAP) Rates.

Where local agreements or variations are in place, employers and trade unions will need to discuss implementation of the updated section 17. More materials to support these discussions will be developed once the new mechanism has been agreed.

We have negotiated a new mechanism that will calculate rates and will adjust with changes to inflation linked to motoring costs, published by the Office for National Statistics. This is the most appropriate measure of motoring costs that exists. More information can be found here.

No mileage reimbursement scheme is perfect, and this is dependent on factors like how many miles you travel, the type of car you use, your individual costs, and even your style of driving. For example, if you are a high mileage driver or drive an older, less economical car, it may be that the new proposals do not fully cover your costs. However, unions believe the new mechanism will more fairly recompense you for using your own car for work in comparison with the old national scheme.

Yes. As the mechanism uses a measure of inflation that is linked to motoring costs, if this goes down then the rates could also go down. However, if this happens it would be in response to falling costs to the motorist and therefore is still fair. 

If agreed and implemented, the new baseline rates will be higher than they currently are, and the drop-down rate, where a lower rate applies, is increasing from 3500 miles to 4500 miles. These two changes should help drivers, particularly community staff who drive more miles than most NHS Staff.

Using your own car for work and driving lots of miles leaves you, the driver, with costs and risks. This is why we’re also working on ways to reduce the NHS's reliance on the Grey Fleet, and we’re encouraging employers to think about alternatives such as pool cars that staff and teams can use. Under Net Zero initiatives, employers should be looking at reducing the impact of the Grey Fleet and finding greener ways to travel.

The new baseline rates will apply to all car types. The next stage of the negotiations will be to review the role of electric and hybrid cars and how to encourage greener alternatives to travel, in line with net zero strategies. The Department of Health and Social Care have indicated that they want to discuss a separate rate for electric or hybrid/electric cars. 

Speak your local branch about your experience using an electric or electric/hybrid car to ensure that the negotiation team have this feedback.

Some people own their car outright and some have a car through a salary sacrifice scheme. Others have a lease car provided by their work for their job. The new rates won’t apply to lease cars where these are “company cars” provided by the employer.  

Where staff have purchased a car, or have a hire purchase agreement through a salary sacrifice scheme, we understand that reimbursement rates vary depending on local policy and terms of those agreements. Answering this question and providing guidance to employers and drivers is still part of our national discussions. 

The new mileage reimbursement scheme aims to fairly reimburse staff for the extra costs they bear because they use their own car to carry out the tasks and duties of their job. It does not incentivise driving, and unions are working to reduce the reliance on staff using their own car.

Unions believe that the new mechanism is the best that can be achieved through negotiations. The alternative to the new mechanism is to stick with the current mechanism, which relies on fuel costs only, not the wider costs of motoring.

Speak to your local RCN representative about what action is being taken locally on this issue.

You may be able to claim Mileage Allowance Relief (MAR).

Raise your concerns with your manager as soon as possible. If they don’t offer a solution, contact us to discuss your options.

Fuel cards are a great way for staff to pay for fuel while using pool cars (shared vehicles owned, maintained and kept by the employer for use by staff in the course of their duties).

However, fuel cards do not cover the full cost of motoring, for example wear and tear and maintenance. There is also a tax implication if using a fuel card for fuel for a lease or personal vehicle. Careful consideration should be given to the terms and conditions of any agreement on the use of fuel cards.

Some employers have stated that they cannot pay the national Agenda for Change mileage rate because they would have to process P11Ds for staff to calculate tax on the additional income. They say this would cost too much or take too much time. However, here at the RCN, we believe this should not stop our members from being properly reimbursed for their expenses.

HMRC set the thresholds for mileage and other expense rates. If an employer pays up to the threshold, no additional tax is due to be paid. However, tax will need to be paid for any expenses paid over the rate set by HMRC here.

Section 17 of the NHS Terms and Conditions booklet sets out mileage rates that trusts can use to reimburse work mileage. These rates can be found here.

NHS Terms and Conditions set a rate of 59 pence per mile (for the first 3,500 miles per year). This is above the tax threshold set by HMRC. Therefore, only the excess amount of 14 pence per mile is subject to tax. If your employer uses payroll to pay your expenses, the P11D is not required.  Your payroll can simply calculate the extra pence per mile as income and calculate your tax or National Insurance on a single amount of your salary, plus the mileage.

For example, if your gross salary is £2,500 per month, and you also claimed 500 work miles in the month, your pay slip would show your gross salary of £2,500 and your mileage payment of £295 (500 miles at 59 pence per mile). You would pay tax and national insurance on your salary and £70 of the mileage payment. This would not require the P11D.

If your employer pays your expenses separately from payroll, then a P11D is required to ensure you only pay the correct amount of tax, and that your employer also pays the correct National Insurance contributions. While this is an extra process, it is automated by many payroll systems. Many NHS and other employers manage to process these payments to employees every month. 

If your employer is using this as a barrier to increasing mileage rates, please contact us for support.