Fleet News

£3 billion car tax rise on the way?

THE size of Britain's directly managed company car fleet is expected to decline in the light of tax increases which could raise up to £3 billion from company car drivers. In contrast the contract hire and daily rental fleet market is expected to increase amid a surge in staff opting for the cash alternative.

The dramatic changes which would transform the UK fleet industry have been outlined by business forecaster James Morrell in the 1996 Business Forecasts for the Motor Trades to 2001 from investment bank Charterhouse.

Morrell claims the Inland Revenue is losing £1 billion a year through abuse of the company car tax regime, largely due to small businesses not declaring their vehicles as 'company cars' and company car drivers clocking up unnecessary business miles in pursuit of reducing their company car tax bills under the present regime. He says: 'The 1996, or a subsequent Budget will probably attempt to rectify the position. The tax regime is likely to be tightened to raise an extra £1 billion-£2bn. This additional turn of the screw would no doubt accelerate the reduction in business car ownership.'

Additional tax could also be raised through a flat duty being imposed on company-owned car parking spaces and further cash would be raised through increases in fuel duty.

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