Fleet News

ACFO proposals for company car tax sent to Inland Revenue

EIGHT different proposals for revising company car tax have been analysed by the Association of Car Fleet Operators and the findings submitted to the Inland Revenue. The Inland Revenue is investigating alternatives to the current benefit-in-kind tax arrangements for company cars, based around a switch from business to private mileage tax breaks.

ACFO has long campaigned against the illogical nature of the current company car tax system, with its inherent incentives for employees to drive further than necessary to reach the 2,500 and 18,000 business mileage thresholds.

The proposals comprise:

  • Abolish any mileage breaks. The fuel scale charges for taxing company car drivers in receipt of free fuel for their private motoring takes no account of mileages driven, and the same philosophy could be applied to company cars.
  • Introduce three bands for private mileage tax breaks - fewer than 5,000 private miles per year, 5,001 to 15,000 miles, and over 15,001 private miles.
  • Create five bands for private mileage tax breaks - fewer than 5,000 private miles annually, 5,001 to 10,000 miles, 10,001 to 15,000 miles, 15,001 to 20,000 miles and over 20,001 miles.
  • Levy company car tax based on a fixed pence per mile charge.
  • Fixed pence per mile charge based on a car's list price.
  • Create six bands based on the ratio of private to total mileage.
  • Revise the current system by changing and introducing two more business mileage tax breaks.
  • Combine a percentage of list price and pence per mile figures, eg 15% of list price plus 20p per private mile; 20% of list price plus 15p per private mile; 15% of list price plus 15p per private mile; and 20% of list price plus 10p per private mile.
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