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									Guidance for clergy on the reimbursement of motoring expenses
1.       Where clergy use their own cars for official purposes, it is necessary for them to keep a
log of journeys undertaken so that they can correctly apportion the costs between private use
and official use. Where they „wear several hats‟, it is essential for all journeys to be logged, so
that the expense incurred can be properly claimed from the appropriate body. However, in
many cases, this log can be fairly simple – a note of mileage at the beginning of each week and
a separate note of all official journeys. Responsibility for the reimbursement of the costs of
official use falls to the appropriate body.

2.      The simplest way to reimburse motoring costs is to use a mileage rate. The
Archbishops‟ Council issues recommended rates; many diocesan boards of finance also issue
their own recommended rates. PCCs and other bodies responsible for reimbursing motoring
costs may, of course, adopt one of these rates or set their own.

3.     Each year, HM Revenue & Customs publish Approved Mileage Allowance Payments
(AMAPs). Any reimbursement which is in accordance with these rates may be paid tax-free.
Where a rate lower than the AMAP is paid, tax relief is available up to the level of the AMAP.
Where a rate higher than the AMAP is paid, the excess will be taxable.

4.       It is sometimes suggested that a mileage rate may not fully meet the actual costs
incurred. An alternative method of reimbursement is for clergy to keep full records of all actual
official costs and to submit a claim based on these (and the relevant proportion of standing
costs and depreciation). However, if the amount actually paid under this method exceeds the
amount which would have been payable using the AMAP, the excess will be taxed.

5.      Mileage rates and AMAPs cover all running costs (e.g. loan interest, insurance etc) but
do not cover external costs such as parking, congestion charges and road tolls. The actual cost
of these should be reimbursed separately.

Additional passenger car mileage payments
6.       Additional passenger car mileage payments of up to 5p per mile per passenger are free
of tax provided
      The passengers are fellow workers of the person claiming the passenger mileage rate
      They are going to the same event e.g. a meeting, which is work-related travel for them
      The expenses paying body has agreed to pay an additional work-related travel mileage
         rate for passengers
      The vehicle used is a car or van.
The exemption can not be applied to a payment that would have been made anyway (e.g. where
the „normal‟ mileage rate is more than 40p per mile). The exemption only applies where an
additional work-related travel mileage rate for passengers is agreed (and paid) by the expenses
paying body.

Mileage rates greater than AMAPs
7.     There is nothing to stop PCCs and clergy agreeing mileage rates in excess of the
approved rates if they think that this is necessary to reimburse clergy for the cost of
motoring (subject to any guidelines issued by the diocese). However, any reimbursement
over approved mileage rates set by HMRC will be taxable.

8.      Guidance on how clergy should inform HMRC of the excess (or shortfall) of actual
motoring expenses from AMAPs are set out in the notes for completing box 21 of the
„Ministers of religion‟ page of the 2008/09 tax return. These notes can be found at under resources “Tax Return Information (note S45a)”.

9.      Normally, the tax code for the subsequent year will be adjusted to collect any additional
tax due, or give a rebate.

Worked example of how clergy may calculate a mileage rate (using
notional figures)
10.     For a cleric driving 10,000 miles a year, of which 3,500 miles is on official business.
Original cost of car £7,000 second hand (2 years old)

                           Total cost for 10,000 miles
Fuel                       £1,800
Depreciation               £1,100
Loan interest – Clergy Pay £350
car loan
Insurance                  £500
Services and sundries      £505
VED                        £145
Total cost of motoring     £4,400
Per mile                   44p

In this example £1,540 has been spent on official business travel.

If 44p per mile mileage rate used, the excess over 40p per mile will be taxable. For 3,500 miles
40p per mile is £1,400.

Cleric received £1,540. The taxable amount, £140, would be entered at box 7 on the „Ministers
of Religion‟ page on the tax return, and the subsequent year‟s tax code adjusted to collect the
£28 tax due. (at 20% (2009/10 rates))

Cleric received £1,540 in the year in which expenditure is claimed, but would have a tax charge
for £28 included in the calculation of the tax code for the next year.

Overall, clergy lose out by the £28 tax.


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