Fleet News

More confusion over future company car tax

THE fleet industry was cast into confusion once more this week as experts grappled with the interpretation of Government documents dealing with the future treatment of company car tax. In the March Budget, the Inland Revenue said the system for the 1999/2000 tax year would 'apply for 2000/01 and 2001/02'.

However, this still leaves scope for the Government to change the existing 15%, 25% and 35% list price scale charges while maintaining the present structure - as it did in March. Such changes would appear to be no more complex than the annual notice of tax coding changes for employees, despite claims from Association of Car Fleet Operators' director Stewart Whyte that there would be 'horrendous compliance costs'.

Leading accountants expressed surprise at the latest revelations, but said they were not beyond the realms of possibility. Gary Hull, director of global HR solutions at PricewaterhouseCoopers, said: 'It would be unfair on high business mileage drivers.' On the issue of falling tax bills for so-called perk drivers, he added: 'There is perhaps some concern that as cars come up for renewal, these drivers will jump out of their company cars because of fears of horrendous tax bills in 2002. People clocking up 18,000-plus business miles have less opportunity to move out of their company cars because these are job-need vehicles and may look to their employers for recompense.'

David Rawlings, senior manager, Deloitte & Touche Automotive Sector Group, said the reported changes flew in the face of Government promises to give fleets until 2002 to select 'green' vehicles. Alastair Kendrick, director of PAYE/NIC solutions at Ernst & Young, said: 'There is nothing in writing from the Inland Revenue that it would not increase the tax rates and it has said the changes will occur in 2002, but that does not mean no changes will happen in the interim.' However, an Inland Revenue source said: 'There are no changes to what we said at the last Budget and the system is intended to last until 2002.'

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