Fleet News

Drivers to take cars not cash

GOVERNMENT statisticians believe the number of company car drivers will rise under the new benefit-in-kind tax regime at the expense of personal motoring plans. Forecasts suggest that drivers at the tax band margins who have opted for a cash allowance in lieu of a company car will move back into the fleet fold when the new regime becomes effective in April 2002.

Sara Woollard, policy adviser to the Inland Revenue, said: 'Provisional analysis suggests that people who do not drive many business miles could downsize, and we expect some to cash in their allowance and move back into a company car.' This will not undermine the 'green' credentials of the new environmentally-based company car tax because drivers will have to choose cleaner, more fuel-efficient, vehicles to cut their tax bills.

The new tax will be based on a proportion of a car's list price, graduated by carbon dioxide emissions per kilometre. This means that drivers prepared to choose a more fuel-efficient vehicle can achieve significant tax savings. Broadbrush figures suggest that the new system could start at 15% of list price for vehicles emitting less than 135g/km of CO2, and rise by 1% of list price for every additional 5g/km of CO2.

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