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HMRC internal manual

Employment Income Manual

Tax treatment of Local Government Councillors and civic dignitaries: expenses deductions: guidance note prepared by the Association of Local Councillors

[Note:  This note refers to the legislation and terminology which were in use at the time when it was written.]

“Local councillors - expenses under Section 198 ICTA 1988

Attendance allowances, with travelling and subsistence allowances where appropriate, paid by the local authority in connection with approved duties, are assessable to Income Tax under the rules of Schedule E.

In addition to the expenses covered by the travelling and subsistence allowances which councillors receive from the local authority in connection with approved duties certain items of expenditure may also be incurred in their capacity as councillors other than in connection with approved duties. A deduction for tax purposes may be claimed by councillors for such expenses provided they are incurred wholly and exclusively and necessarily in the performance of their duties as councillors and are met from their taxable allowances.

No deduction can be given

  • where reimbursement has been or could be claimed from the local authority
  • where a councillor could use services provided by the local authority, for example, postage, stationery, but incurs expenses because he chooses not to do so
  • where expenses are incurred for political purposes, for example electioneering
  • for an amount in excess of the total taxable allowances received in respect of the councillor’s duties
  • where a councillor receives a non-taxable allowance (financial loss allowance).

The following notes set out, as a result of discussion with the Inland Revenue, the various types of expenditure concerned, with guidance as to the basis of claim under each individual head. These notes have no legal force and do not affect your rights of appeal on points concerning your own liability to tax. You should remember that the Inspector may require evidence of the amount spent on all or any of the items listed below.

Categories of expenditure


[Note: see EIM65950, the notes on travel are out of date.]

Councillors may incur expenses on necessary travelling in the performance of their duties as a councillor for which they do not receive an allowance from the local authority (because the authority does not regard that particular travel as part of the councillor’s “authorised duties”). In such a case, the councillor may claim expenses as below

a. Car. In the case of a privately owned car used by a councillor

  • *for 1995/96 and earlier: *a standard mileage allowance of 50 per cent of the rate paid by the local authority for approved duties
  • *for 1996/97 onwards: *an allowance calculated using Inland Revenue authorised mileage rates.

Councillors will need to keep records of their mileage on non-approved duties which will attract this relief.

b. Public transport/other. The actual costs incurred for which no allowance can be obtained from the local authority.

Postage and stationery

The amount of claims should be limited to the actual cost incurred.


A claim may be made for the cost of calls made in respect of approved and non- approved duties. No deduction can be given for any part of the rental of the telephone. Any claim should be reduced by any non-taxable reimbursement made by the local authority and where that reimbursement covers the cost of the calls no claim should be made.

Secretarial assistance

A deduction may be given for payments for necessary secretarial assistance involving for example drafting replies to letters, typing and filing where such assistance is not provided by the local authority. Any amounts claimed should be reasonable in relation to the councillor’s allowances and to the assistance given. The amounts must actually have been paid to the assistant on a regular basis; the Inspector may wish to see evidence of such payments.

Hire of rooms

The expenditure to be claimed should be limited to the amount incurred and should relate to hire for “surgeries” or protest meetings such as objections to planning applications. A claim will not be admitted in respect of the hire of rooms for party political purposes.

Household expenses

Where it is necessary for a councillor to provide facilities at home, to do some of his or her work as a councillor, a deduction can be given for the additional costs incurred such as heating and lighting. Following discussions it has been agreed with the Inland Revenue that a standard deduction of £65 per annum up to 1991/92, and £120 thereafter can be given.

[Note: this has been increased to £135 with effect from 2002/03.]

If a room is used exclusively for council business, a claim may be made for the proportion of Council Tax, heat and light relative to that room.”

[Note:  Council Tax is no longer allowable.  See EIM32815 and EIM32820.]