Clause 58 - Mileage allowances: nil liability notices
Finance Bill
11:00 am
Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
At present, as the hon. Gentleman said, employers can seek a dispensation or a nil liability notice from their inspector on payments made for expenses such as business mileage in an employee's own car. The employer will no longer have to report every payment. A dispensation will be agreed when the inspector is content that there is no tax liability—usually when the rates paid do not exceed the Revenue's authorised mileage rates.
With the introduction of the new statutory tax exemption for approved mileage allowance payments—rather than the old administrative practice—the employer can make such payments up to the rates set down in schedule 12 without the need for a dispensation. Dispensations for approved mileage allowance payments will no longer be necessary, which will save both the Revenue's and employers' time. Payments above the approved rate will be taxable because they cannot be dispensed, so we need to remove them from existing dispensations. It will then be unnecessary for every dispensation to be reconsidered individually.
On the hon. Gentleman's specific point, I can reassure the Committee that existing dispensations covering other claims for other types of expenses such as subsistence allowances will not be affected by the change. Employers can rest assured that they will continue to enjoy the benefit of existing dispensations. They will not need to approach their inspector in those cases. The clause simply removes from existing dispensations those elements that refer specifically to mileage payments.