BUSINESS MILEAGE CHANGES FREQUENTLY ASKED QUESTIONS Question 1 What has prompted these changes? 2 Are all staff affected by these changes? Who is most affected by these changes? 3 What are the current eligibility criteria for regular user allowance or business lease? 4 Do I need to do a level of business miles to be able to obtain a lease car under the new scheme? The Trust must deliver cost savings of 11m each year and these changes can deliver significant savings, protecting up to 100 jobs across the Trust without the impact on patient care that other changes may bring. The transitional arrangements also aim to prepare staff for the new national arrangements being implemented on 1 st July 2012, as well as to reduce risk and improve the Trust s carbon footprint. The Trust also considered the old system to be not fair and not applied equally across all staff. All staff who currently claim or are entitled to claim regular car user allowance, receive standard user mileage reimbursement and staff who have a lease car under the present business/family scheme. Some of staff will benefit from these changes and will benefit from the lease car scheme. Some staff will be affected but not significantly and it is mainly staff who are in receipt of regular user allowance, who have a bigger engine size car and who do a lot of business miles who are most affected by these changes. The eligibility criteria determining entitlement to a regular user allowance or a business lease car is as follows: 3,500 or more business miles per annum, or 1,250 or more business miles per annum driving a minimum of 3 days per week, or Spend an average of at least 50% of their time on such travel, including the duties performed during the visits, or 1,000 or more business miles per annum driving a minimum of 4 days per week on such travel, including the duties performed during the visits. No. Employees can obtain lease vehicles who do not do any business miles or for use by family members.
5 How long does the contract for a lease car last? What happens if I have a change in circumstances i.e. retirement, resignation, sickness, maternity leave etc? 6 What allowance will the Trust pay towards the cost of the lease car? 7 What is the process for getting a lease car? How long does it take? 8 Are there any restrictions on the kind of car I choose? 9 Can other members of my family drive the car? The lease is usually for three years. If you have a change in circumstances the matter should be discussed with your line manager, penalty charges are applied if the lease is terminated early. There may be situations where these charges may be waived, advice on this should be sought from your line/hr manager. Please refer to the Driver s Booklet for details on these matters. The Trust will pay no lump sum allowance towards a lease car. The Trust will reimburse all staff on the new scheme for all business miles undertaken at 45p per mile up to 3,500 miles per annum and 18p per mile thereafter. This rate of reimbursement includes a contribution towards fuel and running costs of the car. The length of time to receive the car depends on how quickly you decide which car you want and how quickly the forms can be returned. The lease car provider will take approximately five days to provide you with quotes, documentation and the order of the car. If the car is not available from stock and has to be built in the factory, it can take between 10 and 12 weeks depending upon the model (please note this is approximate and certain vehicles may take longer). No. One of the key benefits of the scheme is that you have a free choice of a car provided that it is suitable for the work that you do. For example, if you carry a lot of equipment you may need a hatchback car or if you transport clients you may need five doors for easy access. The car is fully covered by insurance and arranged on a fleet basis. Initially, the driver and their partner will be included in the insurance. Additional drivers may be added and you will need to provide their full details when applying for your car. There will be an additional charge and a higher excess will apply to young or inexperienced drivers.
10 What is included in the lease cost? 11 What happens if the lease car is damaged? 12 What happens about policy excess if the car is damaged? 13 What are the implications for part time workers? All servicing, maintenance including parts and full breakdown cover Annual Road Fund Licence and fully comprehensive insurance (an excess applies for all claims, currently 100 this will be greater for young and inexperienced drivers). A support service in the event of an accident/incident and all contract management, mileage assessments and Inland Revenue data submissions. Full insurance for both private and business use of the vehicle is provided as part of the lease, however there is a 100.00 excess payable if it is not possible to make the claim via a third party. The excess is paid by the employee directly to the repair garage. If you have an accident you will pay the policy excess as you would for your own car. If young or inexperienced drivers have an accident the excess will be higher. If you are not to blame and the excess can be recovered from a third party this will be refunded. Any damage that is not covered by the maintenance agreement can be recharged. This would normally be caused by misuse or neglect, for example damage to a wing mirror or not having the car serviced at the correct intervals. You may also be recharged for increases in road fund licence and increases in insurance premiums. However, if these items reduce you will also receive an appropriate refund. You would be notified in advance of any changes being implemented. Part time workers who currently claim or who are entitled to claim regular car user allowance or are a standard user, will be treated in the same way as staff who work full time, i.e. they will be financially reimbursed for the number of actual business miles undertaken. There is no restriction for part-time employees applying for a lease car, as long as this does not reduce the salary of the employee below minimum wage.
14 Will the Trust honour existing lease arrangements under the business lease scheme or family friendly scheme and what are the implications if an employee wants to change sooner? 15 Will the Trust provide pool cars/business use only cars? 16 What else is the Trust doing to try and reduce the amount of mileage travelled by staff? 17 Certain groups of staff seem to be disadvantaged by the nature of where they are based, i.e. staff based in rural areas who have to travel more than those based in town. How will this inequality be addressed? The Trust will honour all existing lease arrangements at the current mileage rates until the contract ends. If an employee wishes to change to the new scheme sooner, employees can terminate these contracts; however a termination fee will apply. In some cases, if an employee wishes to transfer to a salary sacrifice scheme, the Trust may meet the termination charges if this is appropriate and cost effective to the Trust. The Trust currently operates a small number of pool cars for specific wards/departments to meet the needs of their patients. These arrangements will continue where the need can be justified and it is cost effective for the Trust. Individual circumstances will be reviewed on a case by case basis and a pool/business use only car may be provided if this is in line with the needs of the service. The Trust has made considerable investment introducing video conference facilities in all of its main hospital sites and has implemented mobile solutions in some areas, which reduces the need for staff to travel as much to a base each day. It is expected that these facilities will be used more regularly, therefore avoiding the need for staff to travel on business activities. Initiatives to encourage staff to use public transport and cycle to work are also in place. The Trust will continue to explore other initiatives to reduce staff travel where possible. Currently, employees are reimbursed on the number of business miles they undertake. Employees will still continue to be reimbursed for actual business miles travelled at rates which are recommended by HMRC and the AA which will cover the costs of using a lease vehicle or using their own vehicle. These rates just may be less than rates employees have been receiving under the current national guidance, which changes on 1 st July 2013.
18 What is business mileage and what is private mileage? 19 How will mileage expenses be paid under the new scheme? 20 What is the business mileage allowance in the new national guidance? Business mileage can be defined as any journey that you have to undertake as part of your work. This does not include normal home to work travel or excess travel; these are classed as private mileage. Sometimes you may travel directly to a client or a meeting without going to your work address. Part of this journey may be classed as business mileage if it is further than your normal home to office journey. This depends on whether employees take out a lease vehicle and also whether the lease is by salary sacrifice or salary deduction. For employees who use their own vehicles, mileage expenses will be paid from expenses claims and via the payroll. For employees who take out a salary sacrifice lease, these expenses will also be processed on expenses claims and paid via the payroll. For employees who take out lease paid by salary deduction, this will operate in a similar way to the old business lease scheme managed by Knowles. These expenses are included a net deduction made by the employee for their private mileage (salary deduction less business miles). This is based on an annual estimate at the start of the lease and subject to an annual adjustment. Mileage returns are made to Knowles Associates. The two systems for salary sacrifice and salary deduction are to provide the most tax efficient systems for employees. The national guidance states that 54p per mile applies when the employer withdraws the offer of a lease vehicle. If the offer of a lease vehicle is in place and an employee unreasonably declines the offer of a lease vehicle, then a reserve rate of 27p per mile will apply. Further discussions are to take place between Staff Side and the Trust to agree a protocol for what constitutes unreasonable.
21 Is it fair to be classifying staff who request a review as a special case when they are just ordinary people affected by these changes? Will I need to evidence that I need further support? 22 How do I apply to be considered as a case for special circumstances? 23 How will the protection payment be made? 24 Where does the amount of 333 come from? The term special circumstances has been merely used to capture a range of employees who will have reasons that make these changes difficult for them including being tied in to existing lease or loan arrangements, where the financial impact of these changes is too much to manage, or where disabled employees have modifications to their own vehicles, as a few examples. The meetings to review these cases will aim to provide support and understanding and the best advice to the employee and the manager and additional protection may apply in appropriate cases. All cases will be treated in the strictest of confidence. The Trust will require employees requesting further support to provide verification, to ensure the Trust s resources go to the cases that need the support the most. The same application form to apply for a protection payment can be used to request this meeting. Application forms are returned to Tracey Sopp, Finance, Arran House, St Nicholas Hospital, NE3 3XT. The vast majority of protection payments will be made as a one-off payment via pay to the level of staff being no worse off than a net 333 in the 8 month period of November 2012 to June 2013 pay. Most of these payments will be made in October and November pay to protect staff ahead of the impact of the changes. Only in circumstances where the protection payment is very significant might the Trust stagger the payment, ie where in excess of 1000. Claims will be accepted up to June 2013 where there are changes in circumstances. The Trust has attempted to protect staff to a level which will be manageable for most staff of 10 per week, which equates to approximately 500 per annum and 333 is 8 x 12ths of 500 for the 8 month period.
25 When will this impact on my actual pay? 26 What if I receive a protection payment and then obtain a lease vehicle prior to 1 st July 2013? Will I need to repay the protection payment? 27 The application form to request a meeting or to apply for protection states that making this claim constitutes my agreement to the transitional arrangements. What am I signing up to? 28 If I have my own car, will I still continue to be paid excess mileage for the move in my base? The changes are implemented on 1 st October, so the first pay to be affected is the October expenses paid in November pay. Regular user allowance will end and the final payment will be in October pay and will not be paid in November. The Trust aims to process as many protection payments as possible in October and November pay ahead of the impact of these changes. The Trust would not look to recover any protection payments made if an employee then takes out a lease under the new scheme. The Trust is trying to support staff moving towards the new arrangements and recognises that staff need to time to consider these changes fully and that there is approximately a 3 month time line for receiving a lease vehicle. The transitional arrangements only apply to the period 1 st October 2012 to 30 th June 2013. Employees are therefore making an agreement to continue to use their own vehicle for business purposes for this time period, or, for a period beyond this if an individual protection arrangement is agreed. It would not be acceptable for employees to accept the protection payment and then refuse to undertake business mileage in their own vehicles. In these cases, the Trust will seek to recover any payments made. Yes, these arrangements will continue at 24p a mile until the new national guidance is implemented on 1 st July 2013 when the rate will become at least 27p per mile. Excess mileage is in place for a maximum for 4 years
29 What are the criteria for disturbance allowance? When will it apply and could it be retrospective? 30 Will disturbance apply to oncall mileage, currently paid to staff travelling in their own vehicles? 31 If I take a lease car what are the tax implications? 32 Will the rates of reimbursement change in the future? From 1 st October 2012, disturbance allowances will be paid to employees with a lease car, when their base is changed and additional costs are incurred by the employee for additional travelling. Under current HMRC legislation, payments to reimburse mileage of any level trigger a taxable benefit charge to the employee, which can be significant as this is calculated on a fixed annual amount based upon the following: A fixed sum set annually by HMRC, multiplied by - A notional CO2 emissions percentage related to the make and model of the lease car. e.g. Fixed sum 16,900 (2009/10 actual) x CO2 percentage, say, 20% = car fuel benefit - 3,380. Disturbance allowances can be paid for additional travelling at a rate capped to the excess mileage rate of 24p per mile as in Q27 above. This will apply for a maximum of 4 years in line with excess mileage and payments are subject to tax and NI. As this change is implemented on 1 st October, staff can commence claims from this point, even if the change in base occurred some time ago, however, retrospective claims prior to 1 st October will not be approved. Yes, this will apply in line with point 28 above. When a car is made available for the private use of an employee, a 'benefit in kind' value is calculated in relation to the car. This is clearly identified in quotations from Knowles and is included in the total cost for the employee. For more information see http://www.hmrc.gov.uk/calcs/cars.htm The Trust will review rates regularly and reflect the rates in the national guidance, HMRC rates and AA rates. This should reflect any increases in fuel costs.
33 What will be the impact of having a salary sacrifice scheme if the NHS Pension Scheme changes to a career average earnings scheme? 34 What is protection covered by the 1992 agreement? 35 What is the impact of salary sacrifice and a reduction in NI contributions on the state pensions? 36 What mileage rates will be paid for electric vehicles? 37 Will the Trust meet the costs of damages to cars from service users and for community teams working in high risk areas? 38 Will I lose my no claims bonus built on my insurance history if I take out a lease car? There is a proposed final agreement to reform the NHS Pension Scheme in 2015. It is not clear at this stage whether salary sacrifice schemes will affect pensions. The Driver s Booklet details that staff need to be aware that if it is the lower salary, after salary sacrifice, which counts as pensionable pay, then this would impact on their final pensions. Section 17 (17.20) of the Agenda for Change NHS Terms and Conditions of Service Handbook states staff with existing protection of regular user allowances as a result of the 1992 agreement on the date on which this agreement comes into operation may continue to receive the regular lump sum payments and allowances for so long as they remain in the same post or until they voluntarily accept a lease car. This would apply to staff whereby this protection was agreed in 1992, providing they are in exactly the same post as in 1992 and have not voluntarily accepted a lease car. This protection is paid as regular user allowance. State pensions are based on paying enough NI contributions for the number of qualifying years. Earnings to qualify in 2012/13 are 5,564 and qualifying years are as follows: - Men born before 6/4/1945 44 years - Women born before 6/4/1950 39 years - Men born after 6/4/1945 30 years - Women born after 6/4/1950 30 years The Trust will pay the same rates of reimbursement as petrol/diesel cars for both lease cars and employees with their own vehicles The Trust will look to implement a system of ex-gratia payments for such cases. No. You need to obtain a letter from your current insurer at the point of taking out the lease car and can also obtain a letter from Knowles on your insurance history at the end of your 3 year lease. This can be provided to your new insurer.