SE65950 - Tax treatment of Local Government Councillors and Civic Dignitaries: expenses deductions - notes for guidance

All councils

In order to ensure that local councillors' expenses are, so far as possible, dealt with in a consistent manner, the Association of Local Councillors has prepared notes for guidance on expenses for circulation to its members. These notes are reproduced at SE65955. Claims to expenses under Section 198(1) ICTA 1988 from local councillors should be dealt with in accordance with them. Where, however, Districts dealing with local authorities have a separate agreement covering the treatment of certain expenses, for example, travelling expenses on non- approved duties, for all councillors, that treatment may be continued if the councillors wish.

Particular attention should be paid to the introduction to the notes which sets out the circumstances in which no deduction for expenses can be given, for example, where expenses are incurred for political purposes.

For example, no deduction is due for subscriptions to a councillor’s party political association. Membership of the association may be compulsory, but that is not enough to satisfy the conditions in Section 336 (see SE31630). Payment of the subscription merely puts the councillor in a position to perform his or her duties. It is not paid in the performance of those duties.The section of the note on travelling expenses reflects the rules on employee travel expenses that applied before 6 April 1998. They do not take into account

the new travel rules that apply for 1998/99 and later years which are explained at SE31900

the new scheme of approved mileage allowance payments and mileage allowance relief which applies from 6 April 2002 (see SE31200 onwards).

Those rules apply to councillors and Civic Dignitaries in the same way as they apply to other office holders and employees. Employment Income Technical will advise if any difficulties arise regarding the notes issued by the Association.

Councils in England and Wales

See also the guidance note issued to local authorities in England and Wales by the Department of the Environment, Transport and the Regions (see SE65970). The comments in the previous paragraph about the new rules for 1998/99 onwards apply equally here.