The 40p Expenses Myth!

I don’t know about any of you but round me petrol prices are at an all time high, about £5.50 a gallon (£1.20ish a litre).  Last time they were this high it stirred up a bit of a debate amongst volunteers and volunteer managers about mileage rates for volunteers travel.  Now appears to be no different.  As there is no sign of fuel prices dropping soon I suspect the issue will rage on.

In light of this I thought it might be helpful to add a few additional thoughts to the debate.  I’d be really interested in reader’s thoughts on these.  I feel it’s time we had a sensible discussion about volunteer travel expenses and what we are actually trying to do with them.

Good volunteer management practice states that volunteers should not be out of pocket as a result of their volunteering.  A principle I fully subscribe to but I feel we may have lost sight a little of this principle when it comes to volunteer travel expenses.  Let me explain.

Most organisations seem to take Her Majesty’s Revenue and Customs approved mileage allowance payment (AMAP) rate of 40p as a volunteer’s mileage rate.  However if we are starting from the principle of not being out of pocket logic would suggest we find out what it costs per mile to run a car and then pay mileage at that rate for our volunteers.  How do we do that I hear you cry.

The Automobile Association website is packed full of useful information on the costs of running a car (www.theaa.com).  They have a section for the running costs per mile of a car that includes petrol, tyres, service labour costs, replacement parts, parking and tolls (https://www.theaa.com/allaboutcars/advice/advice_rcosts_petrol_table.jsp). In effect the costs of running a car once you own it.  Based on these costings, and adjusting for fuel costs (the AA produced a handy monthly fuel price report for the UK), the cost per mile of running a car that cost £14-20,000 to buy with fuel at 120.9 a litre is, wait for it, 23.46p a mile.  We are Volunteer Managers so lets be generous and call this 24p a mile.

Some of you might say hold on; this rate doesn’t include road tax, insurance or depreciation.  No it doesn’t.  When we reimburse travel expenses should we not simply be covering the costs associated with the car being used on our behalf?  We should not be contributing to the costs of owing a car.  The volunteer either has a car or they don’t and if they don’t we would reimburse full public transport costs would we not?

So if 24p a mile is the actual cost of running a car where does that leave the 40p rate often used by organisations?  I can see how the 40p rate has appeal; it is set by someone else HM Revenue and Customs and lots of organisations use it.  It has to also be said it has its drawbacks.  It is very rarely adjusted, it’s not clear how this figure is arrived at and it does not seem to bear any relation to fuel costs.  As far as volunteers are concerned fuel prices go up but the rate never changes.  Using the system I’ve outlined above to calculate a rate has the advantage of clearly being set by an external source and if you calculate the rate annually and adjust the mileage rate accordingly it also reflects fuel price variations.  What would happen if we calculated the rate and it was lower than the rate we offered last year I hear you ask?  Simple, keep the rate as it was last year and this in effect allows for any fluctuations in fuel prices within the year.

So let’s just go back to first principles.  Volunteers should not be out of pocket as a result of undertaking their volunteering.  The cost per mile of running a car is 24p, using the AA’s costing system.  QED we should pay volunteers a mileage rate of 24p a mile.  Discuss!

3 thoughts on “The 40p Expenses Myth!

  1. If the volunteering involves transporting heavier loads than you normally would in domestic life (e.g. collecting donations for a charity shop) it may cause a greater amount of wear and tear on the car. Maybe an alternative would be to agree to cover some repair costs that are clearly load-related (e.g. replacement of shock absorbers)?

  2. Whilst i agree that charities should not pay for volunteers to own a car I do think that they should get some compensation for wear and tear of their vehicle in the course of their activities. Just paying an allowance towards petrol isn’t enough and they should be entitled to money to cover servicing and tyre wear. Besides, petrol is now 130.9p per litre so has blown the 24p calculation out of the water….

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