The employee allowance could be reduced from 45p to 35p per mile from May 1, delivering a saving of £367,000 a year for the council.
Rhondda Cynon Taf council employees could soon have their expenses for using their own vehicles for work-related purposes cut by 10p per mile.
A report by the director of human resources for RCT council will be put before cabinet members on Thursday, February 12, recommending the rate is reduced from 45p to 35p per mile, from May 1, in order to make a saving of more than £350,000.
The 45p per mile allowance was introduced by RCT council in June 2011, calculated on a percentage reimbursement of cover costs for buying and maintaining a car based on guidelines from Her Majesty’s Revenue and Customs.
But, the director’s report indicates that figure might now be too generous, as it cites a recent review by the Automobile Association which suggests the average running costs of a car are significantly lower than 45p per mile.
The director’s report says: “The rates indicated are between 16p and 26p per mile for diesel cars and 17p and 27p per mile for petrol cars, and therefore it would not seem unreasonable to set a revised rate for council employees to claim mileage reimbursement at a figure of 35p per mile irrespective of vehicle engine type.
“An additional consideration is that should the council set a mileage reimbursement level below the HMRC rate, then employees may also be able to claim tax relief directly from HMRC, but it will depend on their personal tax circumstances.
“The legal position is that as the mileage rate is not incorporated within an employee’s contract of employment, and as such there is no legal requirement to issue formal notice of the change.
“Nevertheless, discussions will take place with the trade unions in respect of this matter.”
If, as recommended, the proposal is agreed by cabinet members on Thursday and implemented on May 1, the council’s savings for the 2015/16 financial year are estimated to be £367,000.
RCT council is continuing to reduce its spending, in order to shed £70m from its budget by 2017/18.