Fleet News

Government U-turn over private mileage-based company car tax

THE Government has abandoned plans to introduce a company car tax system based on private mileage. Concerns that the introduction of such a regime would result in the increased use of privately-owned, less environmentally-friendly cars, and a significant increase in the administrative burden facing businesses and company car drivers, have forced the Government U-turn.

The admission was immediately welcomed by the Association of Car Fleet Operators and the British Vehicle Rental and Leasing Association, both of which sent submissions to the Inland Revenue highlighting the inadequacies of the Government's plans. Chancellor of the Exchequer Gordon Brown announced in the March Budget that the Government wanted to abolish the existing 2,500 and 18,000 business-mile tax breaks, and replace them with a company car tax regime based on private miles, to end the clocking up of so-called 'wasted mileage' to obtain discounted tax bills.

The Government also said that by changing the tax system it wanted to reduce the impact on the environment of emissions from company cars. Since the Budget announcement eight months ago the fleet industry has been waiting for publication of a consultation document. But this week it emerged that the Government had abolished the plan.

An Inland Revenue spokesman said: 'The Chancellor asked for views and Government has taken on board what people have said and recognised that probably a shift from business mileage to private mileage would not achieve the environmental targets the Government is setting, but it would increase the administrative burden. It has abandoned the scheme.'

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