The Government has indicated that it will retain the 35% figure as a maximum, but is keen to discourage unnecessary journeys by drivers trying to cross the mileage thresholds. By reducing the upper tax threshold of 35% of list price to 32% and then 30%, the Inland Revenue would encourage so-called 'perk' drivers to keep their company cars, rather than swap them for a cash allowance. A higher rate taxpayer with an Audi A4 1.9 TDI SE, for example, would see his company car tax fall from today's £2,962 (£21,164 x 35% x 40%) to £2,708 a year and then £2,540 by the 2001/02 tax year.
Under the proposed carbon dioxide-based system scheduled for April 2002, the Audi's benefit charge would fall to £3,810, leading to an annual tax bill of just £1,524, a saving of £28 per week compared to the present regime. The outlook is bleaker for the two thirds of company car drivers who cover between 2,500 and 18,000 business miles a year, and who could see the middle tax threshold rise from 25% of list price to 28% and then 30%.
But the main brunt of the rumoured tax changes would be essential car users clocking up more than 18,000 business miles a year. Insiders suggest their annual company car tax bill could double over three years, from 15% of list price to 20% and then 30%.These drivers have already suffered a 28% increase in tax in the current financial year, and to remain neutral over the next three years they will have to swap to a car half the price of their current vehicle.
Login to comment
Comments
No comments have been made yet.