These FAQs have been developed to help employers answer queries about mileage allowances, for staff covered by Agenda for Change. For the latest mileage rates - see Pay and Conditions Circular (AfC) 3/2014.
These FAQs cover the following main areas:
The new system - Q1 - 13
1. Who do the new arrangements apply to?
All staff covered by the NHS terms and conditions of service handbook. The new arrangements do not apply to staff within the remit of the Doctors' and Dentists' Review Body and very senior managers, with the exception of those employed on the Terms and Conditions of Service for NHS Doctors and Dentists in Training (England) 2016. For these doctors, their terms and conditions make clear that the rates of reimbursement can be found in Section 17 of the NHS Terms and Conditions of Service Handbook.
Other doctors and dentists not on the 2016 contract will continue to be paid at the mileage rates set out in their terms and conditions, and in the latest Medical and Dental Pay and Conditions Circular.
For very senior managers, they will be paid according to their local policies and contracts of employment.
2. Do these changes override previous local agreements?
Where local partnerships have agreed alternative arrangements, it is for them to decide if they wish to maintain the local agreement, or implement the new national system (paragraph 17.4).
3. Why is the new system of reimbursement better than the old one?
The old system did not include a method for estimating the cost of business motoring and setting rates of reimbursement in line with costs. One consequence of this was that rates of reimbursement always went up after a review, never down, due to their infrequency. Under the new system rates can go down as well as up. The old system had a different rate for frequent and infrequent travel. The new system uses the Automobile Association Trust (AA) guides as a basis upon which to calculate and review reimbursement rates and it applies the same rates to all staff.
Moving to a system which applies the same rates of reimbursement for all can result in some drivers being reimbursed more than previously and others less for example, some "regular" users will see their overall reimbursement increase, while for others there will be a reduction compared to what they currently receive. These changes are a necessary part of moving to a fairer, more transparent and simpler system.
4. How does the new system work?
Under the new arrangements, the same reimbursement rates apply to all staff. There is no distinction between staff who travel often on NHS business ("regular users") and those who travel less often ("standard users"). The size of engine does not count. The NHS Staff Council will set the rates in partnership, based on the motoring costs published by the AA and will review them twice a year, moving them up or down to ensure they are in line with current motoring costs.
5. How do the AA guides inform NHS rates?
The AA is regarded as an independent expert on motoring and motoring costs utilising the latest evidence. Each year the AA produces illustrative guides of motoring costs which are regarded as authoritative. These set out the elements of costs involved in running a car for a typical car owner using his or her vehicle for normal “domestic” purposes, for example travel to and from work, shopping trips and holidays. The NHS Staff Council will use the AA guides as the source of its estimates of the costs of business mileage.
6. What information is taken from the AA guides?
The AA guides provide different illustrative costs for private car use based on a range of different annual mileages and cars in different price ranges. The NHS Staff Council uses the AA figures for cars in the middle price range and an assumed annual combined private and business mileage of 10,000 miles, as a basis for all the cost items which are taken into account.
7. Motoring costs - like petrol costs - can change frequently. How would the new system take this into account?
Fuel is only one element of the cost of motoring. The NHS Staff Council will review all motoring costs twice each year in April/May and November/December, using the latest information produced by the AA. If these reviews show that reimbursement rates need to change, in line with the Staff Council agreement, new rates will apply from 1 January and 1 July respectively.
8. Why won't the new system link rates of reimbursement to engine size?
The AA does not take account of engine size when producing its illustrative estimates of motoring costs - bigger engines, in new cars, are often more fuel efficient than smaller engines in old cars. On this basis, the NHS Staff Council believes this is no longer a reliable way of estimating costs.
9. Why are there no lump sums in the new system?
In response to our 2009 consultation employers and trade unions said they would prefer a system which reimbursed all business motoring costs through a fixed rate of reimbursement per mile travelled. This is a simpler, fairer and a more transparent method of reimbursement which applies to all staff.
10. Why does the rate of reimbursement drop after 3,500 miles?
This is the point at which employers and staff need to discuss the possibility of lease, pool or hire cars. We also believe that this is the level at which the “standing costs” for running a vehicle for business purposes have been met. To continue to pay a full rate of reimbursement for all miles travelled would run the risk of putting some staff into profit when using their vehicle for work.
11. What if an employee starts doing more business miles at work?
The new rates of reimbursement will be paid for each business mile travelled. That is at 56 pence per mile before 3,500 miles in a year and at 20 pence per mile thereafter. Subject to this threshold each additional business mile travelled is reimbursed at the appropriate rate, subject to the qualifying rules.
12. What if an employee changes his/her car?
This will not affect the reimbursement staff receive for the costs of the business miles they travel for work.
13. When does the 3,500 miles per annum run from - April to April or July to July?
The agreement does not specify. The ESR is being set up to start counting from July (when the agreement came into effect) to July.
Reviews - Q14 - 17
14. How often will business motoring costs be reviewed?
The NHS Staff Council will review the costs of business motoring twice a year in April/May and November/December, following the publication of the latest AA guides on motoring costs.
15. How will these reviews work?
In April/May the NHS Staff Council will use the estimates of the costs of motoring published by the AA in their guides to check the current rates of reimbursement for NHS staff. If there is a change in overall motoring costs, that in turn produces a five per cent change - up or down - in reimbursement rates, new rates will be implemented on 1 July. The same will apply in the second review in November/December – if it results in a five per cent change in rates, up or down. Following that review new rates would be effective on 1 January.
16. Will any changes in motoring costs trigger a change in the rates of reimbursement?
The system introduces the rule that if the change in motoring costs produces a change in the rates of reimbursement of less than five per cent, up or down, rates will not change. If the change in rates produced by the change in motoring costs is more than five per cent, rates will change on 1 July or 1 January.
17. What costs are reviewed?
In April/May all motoring costs taken into account are reviewed. In November/December the cost of fuel only is reviewed.
Mileage reimbursed - Q18 - 20
18. What mileage is included in claims for reimbursement?
The new system introduces the principle of "eligible miles" and requires that normal, daily home to base return mileage is deducted from claims for reimbursement i.e. the system provides for only additional out of pocket expenses to be claimed. It is no longer necessary to use triangles to calculate reimbursable mileage.
19. What happens if the employee normally starts his/her NHS business journeys from home?
The new agreement requires the employer and employee to agree the normal work base and the normal home to base return mileage. When the line manager and employee agree that the employee is based at home for the purposes of mileage claims the employee is reimbursed for all business miles travelled from his/her home to the places visited and back to home.
20. What is the reserve rate?
The "reserve rate" replaces the old "public transport" rate and is for use:
- if an employee unreasonably declines the employers offer of a lease car
- when employees are required to return to work or when they work overtime on any day
- when an employee is moved to a new base and they incur additional travel to work expenses
- and in a limited number of other circumstances as detailed in the agreement (paragraph 17.17).
Other road users - Q21
21. What about costs for motorcycle users
The new system contains rates of reimbursement for motorcycle users which will be linked to rates for car users.
Leased cars - Q22 - 23
22. What about rates of reimbursement for lease car users?
Arrangements for the provision of lease cars to NHS staff will continue to be the responsibility of local partnerships, and informed by HMRC recommended rates.
23. Do NHS organisations have to use the new system?
Where there are already locally agreed alternative arrangements in place, for example “approved mileage allowance payments” (AMAP rates), then it will be for the local parties to decide if they wish to maintain the local agreement or implement the new national system (paragraph 17.4).
Employers are free to seek to negotiate a local alternative for mileage reimbursement, but this would be dependant upon agreeing this in partnership.
Protection - Q24
24. Are there any national protection arrangements in place?
No, the new system replaces the previous Section 17 and all existing national agreements on protection. The delay in implementing the new system, since 2010, was the protection period.
Green Issues - Q25
25. What makes the new system compatible with the responsibilities on the NHS to reduce its "carbon footprint"?
The system discourages excessive travel when this is not in the best interests of patients. Rates of reimbursement are not linked to engine size. The system supports motorcycle users and travel by pedal cycle whenever this is consistent with efficient use of time and resources.