Chapter EIM65960

CourtHM Revenue & Customs
Published date22 May 2014
Record NumberEIM65960

[Note: for councils in England this guidance supplements and amplifies the basic guidance at EIM65920. See also:

Part two - taxation of members’ allowances and expenses (see EIM65970)

Part three - members’ allowances and National Insurance Contributions (see NIM05640 onwards)]

“Main statutory provisions
  1. Section 18 of the 1989 Act, as amended by section 99 of the Local Government Act 2000 (“the 2000 Act”), makes provision in relation to basic, special responsibility and childcare and dependants’ carers’ allowances for members of local authorities. The Secretary of State can make regulations under this section requiring local authorities to make a scheme of allowances for their members and to establish and maintain a panel to make recommendations to the council about the scheme.
  2. Section 100 of the 2000 Act allows the Secretary of State to make provision in relation to travel and subsistence allowance for members of local authorities and an allowance for non councillors who are members of a council’s committee or sub-committee. This includes the amendment or repeal of provisions of sections 173 to 178 of the Local Government Act 1972.
  3. The Local Authorities (Members’ Allowances)(England) Regulations 2003 (“the Regulations”) have been made under these provisions. These have recently been amended to change the dates by which local authorities must comply with the regulations. This Guidance deals with the regulations as so amended. The Regulations provide that it is for each local authority to decide its scheme and the amounts to be paid under that scheme.

Councils are required to establish and maintain an independent remuneration panel which will broadly have the functions of providing the local authority with advice on its scheme, the amounts to be paid and the pensionability of allowances where relevant. Local authorities must have regard to this advice.

  1. The approach, therefore, is one where questions as to the amounts payable to members are matters for local determination. In this way, councils can take full account of their particular circumstances, including the precise form of their new constitution, and be directly accountable to their electorate. This accountability is sharpened through each council being advised on its own allowances scheme by a local panel whose members are required to be independent.
  2. Local authorities must include in their scheme of allowances a basic allowance, payable to all members, and may include provision for the payment of special responsibility allowances and a dependants’ carers’ allowance. By virtue of section 100 of the 2000 Act, the Local Authorities (Members’ Allowances) (England) Regulations 2003 allow the inclusion of a travel and subsistence and a co-optees’ allowance within an allowances scheme. These allowances are also discretionary. Under the Regulations, made under s99 of the Local Government Act 2000, authorities may make provision in their schemes for the eligibility of members for pensions under the Local Government Pension Scheme.
Consolidation of Regulations
  1. The 2003 Regulations broadly replicate the previous provisions for allowance schemes contained in the following Regulations, which are now revoked:
  • the Local Authorities (Members’ Allowances) Regulations 1991 as amended and
  • the Local Authorities (Members’ Allowances) (England) Regulations 2001.

The 2003 Regulations in addition make the following changes:

  • bring travel and subsistence allowances within the overall scheme, and for these to be subject to recommendations of the local panel rather than subject to limits imposed by the Secretary of State
  • introduce a co-optees’ allowance
  • allow the ALG to pay a special responsibility allowance to its members, subject to the recommendations of an independent remuneration panel
  • allow the conservation boards of areas of outstanding natural beauty and combined fire authorities, to make their own schemes of allowances
  • allow waste disposal authorities, and joint boards upon which other authorities are represented, to pay travel and subsistence allowances
  • allow authorities to cease payment to members who have been suspended or partially suspended from their duties, and to make provision for the repayment of allowances
  • allow authorities to backdate allowances to the beginning of the financial year in which they are paid, and to make annual adjustments by means of an index, subject to the recommendations of the independent panel
  • make provision for independent remuneration panels to make binding decisions on which councillors may be eligible for pensions
  • allow parish councils to pay a parish basic allowance and travel and subsistence allowances to members
  • enable parish remuneration panels to make recommendations on allowances paid by parish councils
  • removing the option for parish councillors of claiming financial loss allowance
  • require secondary authorities to have regard to the recommendations of the panels of those authorities which make nominations to the secondary authority.
What allowances can be paid?
  1. In summary, the allowances which are or may be payable to members of local authorities are as follows:
  • basic allowance
  • special responsibility allowance
  • dependants’ carers’ allowance
  • travelling and subsistence allowance.
  1. The new co-optees’ allowance may be payable to co-opted and appointed members of principal councils and non-elected members of other bodies appointed or nominated by a principal council.
Basic allowance
  1. Each local authority must make provision in its scheme of allowances for a basic, flat rate allowance payable to all members of the authority. The allowance must be the same for each member. The allowance may be paid in a lump sum, or in instalments through the year.
  2. Basic allowance is intended to recognise the time commitment of all councillors, including such inevitable calls on their time as meetings with officers and constituents and attendance at political group meetings. It is also intended to cover incidental costs such as the use of their homes.
Special responsibility allowance
  1. Each local authority may also make provision in its scheme for the payment of special responsibility allowances for those councillors who have significant responsibilities. Special responsibility allowance may be payable for duties which fall within the following categories:
  • acting as leader or deputy leader of a political group
  • membership of the executive, where an authority is operating executive arrangements
  • presiding at meetings of a committee, sub-committee, or joint committee
  • representing the authority at meetings of another body
  • membership of a committee or sub-committee which meets with exceptional frequency or for exceptionally long periods
  • acting as a spokesperson for a political group on a committee or sub-committee
  • membership of an adoption appeals panel or panel dealing with licensing or controlling any activity
  • any other activities in relation to the discharge of the authority’s functions as to require equal or greater effort of the member than any of the activities listed above.
  1. A scheme must also specify the amounts of allowance to be paid for each such responsibility.
  2. Where one political group is in control, and where an authority has decided to pay special responsibility allowances, the authority must make provision for the payment of a special responsibility allowance to at least one member of a minority group.
  3. The Association of London Government will also be able to pay special responsibility allowances to those councillors who perform senior roles on it and who are also councillors of London borough councils.
Dependants’ carers’ allowance
  1. A scheme of allowances may also include the payment of a dependants’ carers’ allowance to those councillors who incur expenditure for the care of children or other dependants whilst undertaking particular duties. These duties are specified in the Regulations and are as follows:
  • a meeting of the executive
  • a meeting of a committee of the executive
  • a meeting of the authority
  • a meeting of a committee or sub-committee of the authority
  • a meeting of some other body to which the authority make appointments or nominations, or
  • a meeting of a committee or sub-committee of a body to which the authority make appointments or nominations
  • a meeting which has both been authorised by the authority, a committee, or subcommittee of the authority or a joint committee of the authority and one or more other authorities, or a sub-committee of a joint committee and to which representatives of more than one political group have been invited (if the authority is divided into several political groups) or to which two or more councillors have been invited (if the authority is not divided into political groups)
  • a meeting of a local authority association of which the authority is a member
  • duties undertaken on behalf of the authority in pursuance of any standing order requiring a member or members to be present while tender documents are opened
  • duties undertaken on behalf of the authority in connection with the discharge of any function of the authority conferred by or under any enactment and empowering or requiring the authority to inspect or authorise the inspection of premises
  • duties undertaken on behalf of the authority in connection with arrangements made by the authority for the attendance of pupils at a school approved for the purposes of section 342 of the Education Act 1996
  • any other duty approved by the authority in connection with discharging the duties of the authority or its committees or sub-committees.
Travelling and subsistence allowance
  1. Each local authority may also make provision in its scheme for the payment of a travelling and subsistence allowance to its members, including co-opted members.
  2. This may include provision for the payment of an allowance for those members who travel by bicycle or other non-motorised transport.
  3. The Regulations also...

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