EIM71153 - Volunteer drivers’ guidance: mileage payments

This guidance is for volunteer drivers. It tells you how to work out whether tax is due on any mileage payment or other allowances you receive.

There is separate guidance for employees and commercial operators such as taxi or mini-cab operators.

If you are a volunteer driver you will not usually have a contract of employment. Any reimbursement of your reasonable out of pocket expenses whilst doing voluntary work is not liable for Income Tax or National Insurance contributions. HM Revenue and Customs (HMRC) has accepted that in general allowances paid to volunteer drivers do no more than reimburse their actual expenses. Tax is only charged on any allowances received which result in a profit.

Will I have to pay tax and National Insurance contributions (NICs) on any mileage allowances I receive?

You will only have to pay tax if the allowances you receive during the tax year come to more than the expenses you incur, in other words, if you make a profit. For most people, this will be at the basic rate, but it depends on your total income, this may be at a different rate of Income Tax.

Volunteer driving is not employment for National Insurance purposes. No liability for Class 2 or Class 4 NICs will arise on profits made from volunteer driving.