SE65960 - Tax treatment of Local Government Councillors and Civic Dignitaries: DETR guidance - Part One - members' allowances - England and Wales

[Note: for councils in England and Wales this guidance supplements and amplifies the basic guidance at SE65920. See also:

Part Two – Taxation of Members’ Allowances and Expenses (seeSE65970)

Part Three – Members’ Allowances and the Social Security System (seeSE65980)]

“PART ONE

Members’ Allowances  England and Wales

1. Introduction

The system of allowances

1. The main local authorities in England and Wales are bound by the Local Authorities (Members’ Allowances) Regulations 1991 (SI 1991/351) to establish a scheme of allowances for their elected members. As a result of amending regulations made in 19951, local authorities are free to set their own levels of allowances, in the light of local circumstances, without any reference to ceilings set by the Secretary of State.

2. Separate arrangements under different legislation, sections 173 and 175 of the Local Government Act 1972, apply for appointees to certain authorities, co-opted members of committees and sub committees and for non-councillor members and members of parish, community and town councils.

3. Separate arrangements under different legislation, sections 174, 175, 3 and 5, and 22 and 24 of the Local Government Act 1972, and section 34 of the Local Government Act 1985, also apply for travel and subsistence allowances, conference allowances, allowances payable to civic dignitaries (chairmen, vice chairmen, convenors, mayors or whatever local custom titles them) and allowances to the chair and vice chair of joint authorities.

4. This part of the guidance describes in more detail the allowances payable to councillors and others (see pages 13-14, paragraphs 39-45 for details on travel and subsistence allowances). Councillors on main authorities should obtain details about their authority’s scheme of allowances from their authority. If further information on the relevant statutory provisions is required, the relevant regulations and Departmental Circulars should be consulted.

Allowances for councillors on main authorities

5. In England the main authorities are:

  • county councils
  • district councils
  • metropolitan district councils
  • London borough councils
  • metropolitan joint fire and civil defence and passenger transport authorities (including the London Fire and Civil Defence Authority)
  • the Council of the Isles of Scilly.
  • National Park authorities

In Wales the main authorities are:

  • county councils
  • county borough councils
  • National Park authorities

6. Provision is made for the following kinds of allowances for councillors on main authorities:

(i) allowances which are both to meet expenses and to provide remuneration:

  • basic allowance
  • attendance allowance
  • special responsibility allowance
  • conference attendance allowance

(ii) allowances solely to meet expenses incurred:

  • travelling and subsistence allowance
  • conference travelling and subsistence allowance
  • allowances for civic dignitaries.

Allowances for parish, community and town councillors

7. Provision is made for the following allowances for parish, community and town councillors:

(i) allowances to meet expenses and to provide remuneration:

  • attendance allowance or
  • financial loss allowance
  • conference attendance allowance.

(ii) allowances solely to meet expenses incurred:

  • travelling and subsistence allowances10
  • conference travelling and subsistence allowances11.

Allowances for non-councillors

8. Non-councillor members of committees and sub-committees of main authorities and of parish, town and community councils, and non-councillor members of “secondary” authorities (see paragraph 20) may claim:

  • financial loss allowance
  • travelling and subsistence allowance
  • conference attendance allowance
  • conference travelling and subsistence allowance.

Renunciations

9. Councillors on main authorities may, if they wish, renounce all or any part of their entitlement to basic, attendance or special responsibility allowances13. They can do this by notice in writing given o the proper officer. A councillor can subsequently withdraw the renunciation. They can also amend a renunciation (for example, to limit it to one kind of allowance only). The withdrawal or amendment cannot have retrospective effect. If allowances are renounced or not claimed, the Department of Social Security will nevertheless assume that they are being received for the purposes of calculating benefit entitlements (see part 3). Renunciation, or failure to claim, can also affect a member’s entitlement to claim expenses as a tax deduction (see part 2).

2. Types of allowance

Councillor members of main authorities

(a) Basic allowance

10. Each main authority must make provision in its scheme of allowances for a basic, flat-rate allowance payable to all councillors on the authority. The allowance must be the same for each councillor. The level of the allowance is set by the authority and may be paid in a lump sum, or in instalments through the year.

11. Basic allowance is intended to recognise a time commitment expected of all councillors, including such inevitable calls on their time as meetings with officers and constituents and attendance at political group meetings. It is also intended to cover incidental costs such as the use of their homes and private telephones.

(b) Attendance allowance

12. Each main authority may provide in its scheme for the payment of attendance allowances. If the authority decide to pay an attendance allowance, they must specify in the scheme what duties (see paragraph 14 below) will qualify for the payment of the allowance and the rates of allowance payable. The allowance must be the same for all members of the authority in respect of a duty of any kind carried out at the same time of day and of the same length. Duties must be specified before they are carried out. Most authorities set a scale of payments based on the time a member spends on such duties. Authorities have discretion to decide whether to include travelling time in the period for which the allowance is paid. They also have discretion not to pay more than one allowance in any 24 hour period.

13. The ability to pay attendance allowance gives a local authority the opportunity to recognise the time commitment of councillors in attending specified meetings of or on behalf of the authority over and above the level of such commitment which may already be reflected in the arrangements for payment of a basic allowance.

14. An authority may only specify all or some of the following duties as providing an entitlement to attendance allowance:

  • a meeting of the authority
  • a committee or sub-committee of the authority
  • a meeting of some other body to which the authority make appointments or nominations, or
  • a meeting of a committee or sub-committee of a body to which the authority make appointments or nominations;

(for example, this allows a constituent county council of a combined fire authority, if they wish, to pay attendance allowance for attendance by county councillors at meetings of the combined fire authority)

  • a meeting which has both been authorised by the authority, a committee, or sub-committee of the authority or a joint committee of the authority and one or more other authorities, or a sub-committee of a joint committee and
  • to which representatives of more than one political group have been invited (if the authority is divided into several political groups) or to which two or more councillors have been invited (if the authority is not divided into political groups);

(for example, this allows an authority, if it wishes, to pay attendance allowance for a site visit or attendance at a panel meeting which meets those requirements; the regulations prevent an authority which is divided into political groups from paying attendance allowance for a one party group meeting)

  • a meeting of a local authority association of which the authority is a member.
  • duties undertaken on behalf of the authority:
  • in pursuance of any standing order requiring a member or members to be present while tender documents are opened,
  • in connection with the discharge of any function of the authority conferred by or under any enactment and empowering or requiring the authority to inspect or authorise the inspection of premises,
  • in connection with arrangements made by the authority for the attendance of pupils at special schools.

15. In England, metropolitan district councils and London borough councils and in England and Wales, authorities which appoint members to the National Park authorities may not pay attendance allowance for a duty carried out for a joint authority (fire and civil defence authorities, passenger transport authorities) or a National Park authority since these joint authorities pay their own allowances.

16. If a member of a District Council is also a member of a County Council and undertakes two separate duties, one on behalf of each authority, in one day, and both duties warranted payment of an attendance allowance, then the member would be entitled to an attendance allowance from each authority in respect of the appropriate duty.

(c) Special responsibility allowance

17. Each main authority may also make provision in its scheme for the payment of special responsibility allowances, in addition to any entitlement to basic and attendance allowances, for those councillors who have significant responsibilities such as those of the leader of the council or committee chairmen/women19. The authority has to identify the special responsibilities for which the allowance is to be paid, and the amounts of allowance to be paid for each such responsibility. Where one political group is in control, and where an authority has decided to pay special responsibility allowances, the authority must make provision for the payment of a special responsibility allowance to at least one member of a minority political group.

18. Authorities are free to decide on the payments made to individuals and it is for the authority to decide when to pay the allowance (e.g. at the start of the municipal year, as a lump sum or by instalments etc).

19. The types of special responsibility which an authority may specify as attracting a special responsibility allowance are:

  • acting as leader or deputy leader of a political group;
  • presiding at meetings of a committee or a sub-committee of the authority, or a joint committee of the authority and one or more other authorities, or a sub-committee of such a joint committee; (this category includes the work of both chairmen and vice-chairmen);
  • representing the authority at meetings of another body or at meetings arranged by another body;
  • membership of a committee or sub-committee which meets with exceptional frequency or for exceptionally long periods (this is intended, in particular, to cover meetings of bodies such as licensing sub-committees which have to hold extensive hearings);
  • acting as the spokesman or spokeswoman of a political group on a committee or sub-committee (this enables an authority to recognise the work of a leading member of a minority political group on a committee); and
  • other activities in relation to the discharge of an authority’s functions involving equivalent or greater commitment.

Allowances for County, District and London Borough councillors on “secondary” authorities

20. In a number of cases councillors are appointed by their councils to serve on special bodies which are responsible in those areas for certain local authority functions. In England, the London and metropolitan joint authorities, such as the passenger transport authorities, are treated as main authorities, even though they are set up in this way. Other “secondary” authorities have no powers to establish a scheme of allowances which would enable the payment of basic, attendance or special responsibility allowances to those of their members who are appointed by constituent councils and who are councillors on those constituent councils.

21. However, secondary authorities are able to pay conference/meeting allowances to both their councillor and non-councillor members who are representing local authorities for meetings which satisfy the requirements of section 175 of the Local Government Act 1972, and they remain responsible for paying travelling and subsistence allowances to councillor members.

22. Councils appointing members to these “secondary” authorities may treat attendance at meetings of these authorities or their committees or sub-committees as duties of the councillor for which the council will pay attendance allowance or a special responsibility allowance within their own schemes. If any such payments are made the secondary authority is unable to make any payments under section 175 of the Local Government Act 1972.

Parish, town and community councillors

(a) Attendance allowance

23. Members of parish or town councils in England, and community and town councils in Wales, are entitled to claim attendance allowance for approved duties, but only when the approved duty is undertaken outside the area of their own parish or community. If the parish or community is grouped with others under a common parish or community council, they can only claim attendance allowances for duties undertaken outside the area of the group.

24. The level of the allowance is set by each council, but may not exceed the maximum daily amount prescribed by the Secretary of State. The “day” for this purpose is a period of 24 hours beginning at 3 am. In determining the amount of allowances to be paid, the council must set the same amount for all duties, and for all members of the council, but may vary the allowance according to the length of time over which the duty is performed, or the time of day at which it is performed. Not more than one allowance can be claimed for any one day.

25. A parish or community councillor is entitled to attendance allowance for the following approved duties performed outside the area of the parish or community:

  • attending a meeting of the council or any of its committees or sub committees;
  • attending a meeting of any body (other than the governing body of a school or college) to which the council makes appointments or nominations;
  • attending any other meeting which is both authorised by the council, a committee or a sub committee of the council, or a joint committee of the council and one or more other authorities, or a sub-committee of a joint committee, and where two or more councillors have been invited;
  • attending a meeting of an association of local authorities of which the council is a member;
  • carrying out any other duty connected with the council’s functions approved by the council (the approval must be given before the task is carried out).

(b) Financial loss allowance

26. As an alternative to attendance allowance, financial loss allowance can be paid to parish, town and community councillors. This is an allowance payable towards the additional expenditure (other than travel and subsistence) necessarily incurred in carrying out an approved duty. There is a requirement to declare the extra costs or loss of income caused by performing the duty. The allowance is therefore a reimbursement of expenses or losses rather than a form of remuneration.

27. A parish, town or community councillor must formally opt to receive a financial loss allowance in place of an attendance allowance. This can only be paid for the occasions when an attendance allowance can be paid (see paragraph 25).

28. Councillors must give written notice to their authority of their wish to receive financial loss allowance. If this is done within one month of election, or re-election, the allowance will be paid from the date of election. At any other time, councillors can give written notice to the authority to opt for financial loss allowance: the change becomes effective from one month after the notice is given. Councillors who want to change their option from receiving financial loss allowance to claiming attendance allowance instead can do so by giving notice in writing. They cease to be eligible for financial loss allowance at the end of any duty performed on the day that they withdraw the option. A councillor who opts for financial loss allowance gives up completely the opportunity to claim attendance allowance until the option is changed.

29. The amount claimed cannot be greater than the financial loss that can be shown. It therefore depends on individual circumstances. In addition, the amount payable is limited by rates, set by the Secretary of State and reviewed annually.

30. The most common costs are loss of earnings or loss of profit. The burden of proof is on the individual: no formal documentation is required by law but authorities and their auditors may wish to check claims. Some councils accept as financial losses eligible for the allowance, the costs of child-minding, typing and secretarial services, postage, telephones and other expenses that cannot be claimed any other way. Unemployed councillors with substantial costs of this kind may find that financial loss allowance will help with such costs, while not reducing their social security payments (see Part 3 on councillors’ allowances and social security benefits).

Non-councillors

31. Some authorities have members appointed to them who are not councillors on a local Council. Local authorities can also appoint non-councillors as members of committees and sub committees. These people are entitled to financial loss allowance.

32. The nature of the allowance, and the rules for claiming it, are the same as those for parish, town and community councillors set out in paragraphs 28-30.

33. The approved duties for which financial loss allowance may be paid are as follows:

  • attending a meeting of the authority or any of its committees or sub-committees;
  • attending a meeting of any body to which the authority makes appointments or nominations or any committee or sub-committee of such a body;
  • attending any other meeting which meets the requirements in paragraph 25(iii);
  • attending a meeting of an association of local authorities of which the authority is a member
  • carrying out any other duty connected with the authority’s functions approved by the authority (the approval must be given before the task is carried out).

34. For joint committees and their sub-committees, and for certain other bodies, the allowance can be paid either by the body on which the recipient serves, or by the authority which makes the appointment (but not both).

Conference allowances

35. Allowances can be paid for attendance at conferences and meetings. For county, district, London borough and parish, town and community councils and the Council of the Isles of Scilly, this covers any conference or meeting:

  • which is both organised by any person or body who is not doing so by way of trade, or by any body whose objects are not wholly or partly political;
  • and where the purpose of the conference or meeting is to discuss matters which, in the council’s opinion, relate to the interests of their area, or part of it, or to the inhabitants of their area, or some of them.

For joint boards, joint authorities or other combined bodies all the members of which are representatives of local authorities, this covers any conference or meeting for the purpose of discussing matters which in the body’s opinion relate:

  • to the function of the body; or
  • to any function of local authorities in which the body has an interest.

36. The levels of conference attendance allowances paid by the main authorities to their councillor members are not subject to any specific limit, and are set by the authorities concerned. Allowances of this kind paid to other persons (including parish, town and community councillors) must not exceed the appropriate daily maximum set by the Secretary of State.

37. Allowances for travel and subsistence in relation to conferences are subject to the same rules as for ordinary travelling and subsistence allowances (see paragraphs 39-45).

Allowances payable to civic dignitaries

38. Civic dignitaries (convenors, deputy convenors, mayors, deputy mayors, provosts, chairmen, vice chairmen etc) may be paid a reasonable allowance to meet the expenses of holding their special posts. Parish and community councils do not have powers to pay such allowances to their vice-chairmen.

Travel and subsistence allowances

39. Travel and subsistence allowances are a way of recompensing councillors and those entitled to financial loss allowances for expenditure on travel and subsistence necessarily incurred when performing an approved duty. The costs include train, boat, air and bus tickets, taxi fares, petrol costs, parking, meals, refreshments, hotels and hotel meals.

40. Parish and community councillors in England and Wales may only claim travel and subsistence allowance for duties performed outside the area of their parish or community.

41. The payment of travel and subsistence payable to councillor and non-councillor members is at a rate determined by the council. For travel within the United Kingdom these rates must not exceed limits specified by the Secretaries of State. These limits are reviewed annually, and any changes are set out in a circular letter sent to authorities before the beginning of the financial year to which the new limits apply. For travel and subsistence outside the United Kingdom, it is for councils to determine a reasonable rate.

42. It remains a condition of the payment of travel and subsistence allowances that the duty for which they are paid has been approved before the duty is performed. It is not possible for an authority to decide, after the event, that a travel or subsistence allowance should be paid in respect of some duty.

43. Where someone is appointed by a council to serve on some other body which can pay travelling and subsistence allowances, the actual payment can be made either by the body on which the recipient serves, or by the council which makes the appointment, or by both in agreed proportions. It is for the councils concerned, not the recipient, to decide which is more convenient.

44. The “approved duties” for which travel and subsistence allowances can be paid are:

  • a meeting of
  • the authority,
  • a committee or sub-committee of the authority,
  • some other body to which the authority make appointments or nominations, or
  • a committee or sub committee of a body to which the authority make appointments or nominations;
  • a meeting which has both been authorised by
  • the authority,
  • a committee, or sub-committee of the authority or
  • a joint committee of the authority and one or more other authorities, or
  • a sub-committee of a joint committee

and to which representatives of more than one political group have been invited (if the authority is divided into several political groups) or to which two or more councillors have been invited (if the authority is not divided into political groups);

  • a meeting of a local authority association of which the authority is a member;
  • carrying out any other duty connected with the authority’s functions approved by the authority (the approval must be given before the task is carried out).

It will be seen that the range of these duties is wider than that for which attendance allowance may be paid under schemes operated by main authorities.

45. The following travel and subsistence allowances may be paid to councillors and non-councillor members:

  • Public transport fares: fares on public transport may be reimbursed in full. On boats, first class fares may be paid. On trains, it is at councils’ discretion whether to pay first or standard class fare. Supplements on trains, such as Pullman or ordinary seat reservations, may also be paid. So, too, can the full cost of sleeping car accommodation, but only if the overnight subsistence allowance payable is reduced by a third.
  • Motor mileage rates: Maximum motor mileage rates for car and motorcycle use are specified by the Secretary of State. Revised rates come into effect at the beginning of each financial year.
  • Supplements: There are supplements to the mileage allowances for carrying passengers. The cost of parking (including overnight), toll and ferries can be reimbursed. A hired car attracts the appropriate motor mileage allowance, but authorities can pay, in addition, the whole cost of hiring if exceptional circumstances justify it.
  • Taxi fares: The cost of a taxi or cab and any reasonable gratuity can be reimbursed if there is no reasonable public transport available or  if the council so decides  in the case of urgency, the full fare can be refunded. In other cases, only the cost of alternative public transport is payable.
  • Air Travel: Air fares can be met if the council decides that the time saved by air travel justifies it. The cost of the ordinary or any cheap air fare by regular air service will normally be paid but councils have discretion in cases of urgency to pay the cost of any class of air ticket where no such cheap fare is available.
  • Subsistence Allowances: The Secretary of State specifies maximum rates of day subsistence allowances for specified mealtime periods, which include core times, of over 4 hours absence from the home. This may be a lesser period if the authority permits but the core times would still apply33.

Overnight subsistence is available if duties call someone away for the night. Overnight stays in inner London and at certain conferences approved by the Secretary of State are eligible for a higher rate of overnight subsistence.

In England and Wales, approved conferences are the annual conference of the Local Government Association and the Welsh Local Government Association, the annual conference of the National Association of Local Councils, and annual meetings of the Association of Education Committees, the Council of Local Education Authorities, the Association of British Market Authorities and the British Resorts Association.

The amounts of subsistence allowance paid to claimants are reduced by an appropriate amount in respect of any meals provided free of charge.

If sleeping car accommodation is charged to travel allowance, the amount of overnight subsistence allowance payable is reduced by one third.

Where main meals are taken on trains during a period for which there is an entitlement to a subsistence allowance, the reasonable cost of the meal may be reimbursed in full, so long as the hours of absence and core time limitations are satisfied.

Official and courtesy visits

46. An authority can pay reasonable expenses incurred in making official and courtesy visits inside or outside the UK, which are not approved duties. It is for the council to decide what is reasonable. But in the United Kingdom, the expenses a member receives may not exceed the amount of the travel or subsistence allowance that would have been payable for an approved duty.

Receiving and entertaining VIPs

47. An authority can meet any costs incurred in receiving and entertaining VIPs visiting its area or other visitors connected with local government matters, including giving them information. Once again, in the United Kingdom an individual cannot receive more than the appropriate travel and subsistence allowance that would have been payable for an approved duty.

3. Additional information

Making a claim

48. Each authority will have a system for making and recording allowance claims. Claims for attendance allowance payable by main authorities should be made within two months of the date of the duty performed. The authority is not obliged to pay late claims, but may do so if they wish. In the case of other allowances, authorities have their own arrangements for the timing of claims. At the extremes, some accept a claim at any time while others do so only once a year. In between, the majority of authorities deal with members’ claims on a monthly cycle.

Record keeping and publicity

49. Every authority is required to keep a record of payments made. The record must specify the name of the recipient and the amount and nature of such payment. Records must be available for inspection free of charge by local government electors in the area at all reasonable times. Electors are entitled to make a copy of any part of the record.

50. In addition to the requirements to keep a public record of all allowances, every local authority is required to publish, on any amendment, details of its scheme for basic, special responsibility and attendance allowances, and to publish annually the total payments made of each of these allowances to each councillor.

Further information

51. Councillors and non councillor members who want to know more about the allowances they can claim and how claims are made should contact their authority. Council officers who need guidance on any technical points concerning councillors’ allowances should get in touch with the relevant Government Department. In England, the contact is the Department of the Environment, Local Government Sponsorship Division, Eland House, Bressenden Place, London SW1E 5DU (0171-890 4083). In Wales, it is the Welsh Office, Local Government Policy and Finance Division, Fourth Floor, Cathays Park, Cardiff CF1 3NQ (01222 823684).”


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