Mileage allowances - Section 17 

motorway sign

4 / 6 / 2014 00:00 AM

A summary of the changes to mileage allowances, which apply to business journeys made on and after 1 July 2014. 

Amended rates of reimbursement from 1 July 2014 

Type of vehicle/allowance Annual mileage up to 3,500 miles (standard rate) Annual mileage over 3.500 miles (standard rate) All eligible miles travelled (see paragraph 17.15 and Table 8)
Car (all types of fuel) 56 pence per mile 20 pence per mile  
Motor cycle     28 pence per mile
Pedal cycle     20 pence per mile
Passenger allowance     5 pence per mile
Reserve rate     28 pence per mile
Carrying heavy or bulky equipment     3 pence per mile

  • These rates of reimbursment are reviewed every May and November, using information published in the AA's general guide to car running costs to ensure rates move up and down, in line with business motoring costs.
These arrangements do not apply to staff within the remit of the Doctors' and Dentists' Review Body.

Very senior managers will be paid according to their local policies and contracts of employment.

Amendment to rates in July 2014

Rates were reviewed in May 2014 and new, lower rates were published in Pay Circular (AforC) 2/2014.  On 8 July 2014 the AA published a correction to figures in its guide.  This had the effect of changing the published standard rate of reimbursement for business mileage up to 3,500 miles per year.  Consequently, the rate for motorcycle users and the reserve rate also changed.

Questions and answers  


Why have the rates changed so soon after they were published?

  • The rates are calculated by reference to information in the AA's latest general guide to car running costs.  The guide is updated in May each year.  On 8 July this year, after publishing its updated guide in May, the AA published a correction to some of its data.  As some of the amended data is used to calculate NHS mileage rates these have needed to be recalculated.

When do the amended rates come into force?

  • The amended rates apply to all eligible business mileage on and after 1 July 2014.

Are the amended rates applied retrospectively or from the date of publication of the latest pay and conditions circular (AfC) 3/2014)  

  • Claims for reimbursement made in August, for business miles travelled in July, will be paid for at the higher, amended rates.  

Will the rates change in the near future?

  • The next review of mileage rates, which will take account of fuel costs only, will take place in May 2015.  Any changes to rates of reimbursement resulting from it will apply to all miles travelled from the following 1 July (Section 17, paragraph 13 and Annex L). 

Third review - November 2014

These rates of reimbursement were checked (in November 2014) to ensure they continue to reimburse employees in line with motoring costs.  This check looked at fuel prices in the twelve month period ending in October 2014 using data in the AA's latest general guide to motoring costs.  In this period fuel prices remained relatively stable and there was an impact of less than one per cent on the standard mileage rate.  Rates change if the impact on the standard rate is five per cent or greater.  As the impact this time was less than five per cent, the standard rate for miles travelled over 3,500 per year, and the motorcycle and reserve rates have not changed - see Section 17 and Annex L of the NHS terms and conditions of service handbook for further details. 

These rates will be checked in May 2015 using information on motoring costs in the twelve months ending March 2015.  The five per cent rule will apply as in the November 2014 review.  Any changes to rates resulting from this check would be effective from 1 July 2015.

Key features of the system introduced in July 2013

  • removal of the "regular" and "standard" user categories.  Employers should refer to ESR User Notice Number UN1780
  • removal of "regular user" lump sums and all allowances linked to engine size
  • standard rates of reimbursement for staff using their privately owned vehicles to make NHS business journeys
  • Updated guidance on local leased vehicle policies

Find out more

The new sections and annexes will be in the NHS terms and conditions of service handbook - amendment number 31.  

In addition, the NHS Employers organisation have produced some frequently asked questions.

If you are an employee, please speak to your local HR team or your staff side representative.

If you are an employer and have queries about the new arrangements, please email:  


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