Parish Basic Allowance

Question

Can anybody say what their current parish basic allowance (parish councillor annual allowance) is?

 Whether it is paid to Cllrs or not?

If it is how?  Via payroll or as a one-off payment?

Any comments or observations welcomed...

Answer 1

None of my three small rural parish councils voted for or provide an allowance.

Answer 2

I think this has been raised before and the first point to make is that any allowance must be agreed by your county council or principal authority via their remuneration committee.  There are different rules if you are in Wales but an allowance must be paid via the PAYE system in accordance with HMRC regulations unless the payment is a simple reimbursement of expenses (which wouldn't need your principal authority input).  So, if you as a council agree to reimburse councillors for expenses incurred such as printer ink for example, you can reimburse that expenditure on production of receipts without it going through the PAYE system.  A flat payment for the year, even if intended to cover incidental expenses but without the need to produce receipts, is classed as income by HMRC and potentially taxable.

Comments

I'm going to beg to differ (and challenge) some of your assertions and I am going to say why...  Don't take it the wrong way, the question I want to answer is, what are the authoritative references for the assertions you make.

Assertion 1 - "...any allowance must be agreed by your county council or principal authority via their remuneration committee.."

This is substantially incorrect.

Reference:  https://www.legislation.gov.uk/uksi/2003/1021/part/5/made
The Local Authorities (Members' Allowances) (England) Regulations 2003
Parish basic allowance para 25 (2):

"...must have regard, in setting the level or levels of such allowances, to the recommendations which have been made in respect of it by a parish remuneration panel in accordance with regulation 28..."

Key point - must have regard!  That is not must apply.  What must apply is a majority vote of the PC as is defined in:

LGA 1972 Scp 12 Pt VI para 39(i):

"...Subject to the provisions of any enactment (including any enactment in this Act) all questions coming or arising before a local authority shall be decided by a majority of the members of the authority present and voting thereon at a meeting of the authority..."

Assertion 2 - "...an allowance must be paid via the PAYE system in accordance with HMRC regulations..."

I believe this also to be substantially without foundation (unless you can reference an HMRC BIM (I've looked and can't find one) although I do acknowledge that it is widely propagated as the required procedure.  What I cannot find, is the 'says who' of all this which, instead, tends to be parroted as - HMRC say so but with no reference.

Consider - Arnold Baker p164 para 16.42 which states that: "...The cost and expenses allowance are emoluments and therefore taxable: recipients must declare them to HMRC as part of their income, but may set off against them any actual expenses wholly and necessarily incurred (and not otherwise reimbursed) in the performance of the duties for which the allowance is paid..."

Key point - RECIPIENTS must declare them to HMRC - why is this interpreted as the authority must pay via PAYE / payroll?  This is illogical, unjustifiable and presents a wholly unnecessary addition administrative and cost burden just to issue the allowance.  When issued as PAYE this attracts employers' NI contribution and could effect the cost of Employers' compulsory insurance - since it would show that there could be many more "employees" than there actually are in reality.   
I have faced this situation where the ALC advised the PC that my allowance must be paid by PAYE after provision of my NI number and UTR.

I refused and demanded a direct payment.

PC declined.

PC received a CCJ for non payment

PC paid as I had requested and in accordance with the CCJ.

It is for ME to declare the income, minus deductions, on my own SATR.  I can find no authoritative reference to support the assertion that HMRC require the notification to be via PAYE as opposed to SATR.

I can't imagine why HMRC would have any interest in WHO reports the income - rather just that the income be reported.

Please do tell me / us what references or training / briefing materiel has provided the foundation for your assertions.

PS

Having checked with the Lead for Democratic Services at my own LA just yesterday, it was stated that the renumeration panel had not considered PBA since pre 2009!

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Then why ask the question if you're not going to accept the answer?    I have gone through this process and my response remains.  Specifically I have asked HMRC if any allowance must go through the payroll and received a response I have given.  You may chose to do things your own way, I am simply reporting my experience and the answers I received.

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I'll always ask the question....  And consider any responses which may arise.  Sometimes responses raise second order questions or require clarification / reference in order to be given due weight.  What level of hubris is it that leads you feel that just because you answered, that your answer is 'correct' or above further question...?

One of the problems with this sector is that people simply accept that which is passed around as being 'gospel' without questioning or challenging that which appears to be illogical.  Sometimes there will be a reason for things being the way they are that might not have been immediately apparent and sometimes it is just 'because we've always done it that way.'  It's OK to ask the question.

Do you pay 13.8% on the PBA which goes through payroll as the employers' NI contribution?  If you do, perhaps you might question if this is a fair additional / avoidable tax which is born by the precept.
Are you able / willing to acknowledge that there MIGHT be an anomaly in this supposed 'requirement' to pay an annual allowance via payroll / PAYE - or perhaps Arnold Baker is wrong...?
A once per year annual allowance payment is not PAYE employee payment.

Answer 3

I'm just going to duplicate this as a separate answer in case it gets 'lost' in the replies below....

I'm going to beg to differ (and challenge) some of your assertions and I am going to say why...  Don't take it the wrong way, the question I want to answer is, what are the authoritative references for the assertions you make.

Assertion 1 - "...any allowance must be agreed by your county council or principal authority via their remuneration committee.."

This is substantially incorrect.

Reference:  https://www.legislation.gov.uk/uksi/2003/1021/part/5/made
The Local Authorities (Members' Allowances) (England) Regulations 2003
Parish basic allowance para 25 (2):

"...must have regard, in setting the level or levels of such allowances, to the recommendations which have been made in respect of it by a parish remuneration panel in accordance with regulation 28..."

Key point - must have regard!  That is not must apply.  What must apply is a majority vote of the PC as is defined in:

LGA 1972 Scp 12 Pt VI para 39(i):

"...Subject to the provisions of any enactment (including any enactment in this Act) all questions coming or arising before a local authority shall be decided by a majority of the members of the authority present and voting thereon at a meeting of the authority..."

Assertion 2 - "...an allowance must be paid via the PAYE system in accordance with HMRC regulations..."

I believe this also to be substantially without foundation (unless you can reference an HMRC BIM (I've looked and can't find one) although I do acknowledge that it is widely propagated as the required procedure.  What I cannot find, is the 'says who' of all this which, instead, tends to be parroted as - HMRC say so but with no reference.

Consider - Arnold Baker p164 para 16.42 which states that: "...The cost and expenses allowance are emoluments and therefore taxable: recipients must declare them to HMRC as part of their income, but may set off against them any actual expenses wholly and necessarily incurred (and not otherwise reimbursed) in the performance of the duties for which the allowance is paid..."

Key point - RECIPIENTS must declare them to HMRC - why is this interpreted as the authority must pay via PAYE / payroll?  This is illogical, unjustifiable and presents a wholly unnecessary addition administrative and cost burden just to issue the allowance.  When issued as PAYE this attracts employers' NI contribution and could effect the cost of Employers' compulsory insurance - since it would show that there could be many more "employees" than there actually are in reality.   
I have faced this situation where the ALC advised the PC that my allowance must be paid by PAYE after provision of my NI number and UTR.

I refused and demanded a direct payment.

PC declined.

PC received a CCJ for non payment

PC paid as I had requested and in accordance with the CCJ.

It is for ME to declare the income, minus deductions, on my own SATR.  I can find no authoritative reference to support the assertion that HMRC require the notification to be via PAYE as opposed to SATR.

I can't imagine why HMRC would have any interest in WHO reports the income - rather just that the income be reported.

Please do tell me / us what references or training / briefing materiel has provided the foundation for your assertions.

PS

Having checked with the Lead for Democratic Services at my own LA just yesterday, it was stated that the renumeration panel had not considered PBA since pre 2009!

Answer 4

Ours pays £500pa - paid through payroll - so is taxable.

No consultation with District. Only elected members are allowed to claim, so not Co-opted members. Not every Cllr claims the allowance.
Part of the reasoning given for providing such an allowance was to try to attract new members who may need to pay for child care in the evenings.

I would be very interested in seeing any answers to RoundAgain's questions.

Our Clerk just stated that this was the way it was done.
HTH

Comments

There is no difference between co op and elected members. That is just how they joined the Council. All councillors are of equal standing and should be treated as such. A case of discrimination !

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ClerkinEssex "... All councillors are of equal standing and should be treated as such. A case of discrimination !..."  No, a case of Legislation in this example I'm afraid...

In relation to PBA...
The allowance is payable to ELECTED members - it is NOT available to co-opted or appointed members.
https://www.legislation.gov.uk/uksi/2004/2596/regulation/4/made

The Local Authorities (Members' Allowances) (England) (Amendment) Regulations 2004 amendment to s25 and AB para 16.31 (b)

If elected eligible for PBA (if council approve.)  If co-opted/appointed not eligible for PBA regardless of what council may wish.

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Thanks, you beat me to it - had to look up my Arnold Baker first.