Fleet News

Fears of new benefit-in-kind taxation move

SPECULATION is mounting that the Government's company car tax private mileage reprieve may only be temporary and that it is planning other ways to change the present system. Last month the Government abandoned plans, first announced in the March 1998 Budget, to replace the present company car tax system with discounts for clocking up 2,500 and 18,000 business miles with one based on private mileage.

This week, in answer to a question about reforming company car tax so as to remove the incentive to increase business mileage, Economic Secretary to the Treasury Patricia Hewitt told the House of Commons: 'We are continuing to review how the company car tax regime might be altered to send better environmental signals.' And shadow Transport Minister Bernard Jenkin told Fleet NewsNet: 'There can be no environmental justification to penalise or discourage company cars because it would have an adverse environmental effect. But, we have not heard the last on this subject from this Government.'

Meanwhile, David Rawlings, senior manager in Deloitte & Touche's Automotive Sector Group, suggests the simplest tax move could see the 35% of vehicle list price used as the basis for calculating benefit-in-kind increased. In speculating that the tax threshold could reach 42.5%, Rawlings said the measure would achieve one of the Government's aims of changing the system but not increasing the administration burden on individuals and businesses. It would also raise more revenue.

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