Travel expenses paid to councillors are generally subject to the normal tax rules relating to employees and office-holders. In particular, expenses of ordinary commuting from home to a permanent workplace are taxed as earnings and subject to NIC. There is specific relief for approved mileage payments which is given to those who use their own vehicle for business travel or who carry passengers while conducting business travel.
With effect from 6 April 2016, under provisions to be set out by the Treasury, travel expenses paid to councillors will be exempt from tax and NIC. This will include expenses incurred between home and the permanent workplace, where the home is within 20 miles of the local authority boundary. Relief for approved mileage allowances will continue and home to office travel will be included when applying the limits. Relief for passenger payments will also continue where the passenger is also a councillor.
This measure is aimed at ensuring that individuals are not discouraged from undertaking a role as a councillor due to the tax treatment of travel expenses paid by the local authority.