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NHS lease cars

As of June 2010, NHS employees facing the prospect of lease car arrangments in lieu of mileage allowances should refer to our advice.

We have received a number of reports that some NHS employers are attempting to impose lease car arrangements on staff who currently receive regular user mileage allowances. They are also threatening to pay allowances at the public transport rate if staff refuse to accept the lease car.

The employers are using the following paragraph from the NHS Terms and Conditions handbook as a justification for this:

Section 17.4-

'Employees who prefer to use their own car rather than accept the employer’s offer of a lease car shall be reimbursed at the rate of mileage allowance set out in paragraph 1 of annex l (public transport rate of 24p/mile).'

It is clear some employers are using the paragraph as a mechanism to halve the mileage rate paid to regular and standard car users.

There are a number of issues here for car users:

  • Regular users are required to purchase a car to work and are paid a lump sum allowance and a mileage rate. Purchasing a car is usually a three year commitment that remains a personal liability, even after an employer offers a lease car
  • Standard users are paid a mileage rate only up to 58.3 pence per mile for a larger car. The current AA cost of motoring is 56 pence per mile
  • Lease cars require the employee to pay for personal use but this is then taxed by the HMRC as a benefit, typically resulting in a £2,000 extra tax liability for the employee. Many employees do not want to lease a car if they have already provided their own
  • Therefore a reduction to a mileage rate of 24 pence per mile represents a massive reduction and means employees are subsidising their employers in using their own cars for work

The CSP advice is that employers should be asked not to use paragraph 17.4 in this way and that lease cars should only be provided with the consent of the individual or preferably agreement negotiated with the staff side unions locally.

If the employer wishes to offer a lease car it seems reasonable for the employee to refuse if they have already provided one for work.

However, if the employer proposes to offer the lease cars under the threat of reducing the mileage allowance the following actions should be considered:

  1. The trade union should act collectively against the imposition by the employer of a lease car scheme and consider lodging a collective dispute/grievance in accordance with local procedures.
  2. Staff should give notice they are no longer prepared to use their private cars for work unless they are fully reimbursed for the cost of motoring.
  3. Where the use of a car is necessary for the performance of their duties, staff should indicate they are prepared to use a pool car provided by their employer (para 17.4, footnote 2 ).They should indicate they are not prepared to take responsibility for this car outside working hours but are prepared to collect it at the beginning of the day and drop it off at the end of the working day. In this way they will incur no tax liability.
  4. Alternatively they may indicate they are prepared to use public transport instead of a car if it is only the public transport mileage rate which is to be paid.

It is important that the CSP acts jointly with the other unions locally if your employer proposes to impose lease cars and that CSP stewards advise their senior negotiating officer where this is happening.


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