Fleet News

Treasury secretary defends new company car tax system

FINANCIAL Secretary to the Treasury Stephen Timms has fended off claims that the new CO2-based company car tax system unfairly penalises essential users of company cars.

High mileage drivers are in the majority essential users of vehicles who rely on their company cars most. Their annual company car tax bill is discounted to 15 per cent if they cover more than 18,000 miles a year under the current mileage-based system. But it could hit 35%, the maximum band from 2002, under the new carbon dioxide-based company car tax regime, because their larger cars tend to produce more CO2 emissions.

Timms said drivers now had the choice of driving a cleaner, more tax-efficient company car: 'We want to remove the incentive for drivers to cover extra miles for lower tax bills. Now if drivers choose to go for a car producing a lower level of CO2, they will pay less tax. If they remain with the car they currently have, then they will pay higher tax.'

But fleet consultant Roger Glenwright said the minister was naive to suggest that all high-mileage drivers were simply attempting to dodge tax. He argued that many genuinely high mileage drivers would be truly disadvantaged.

Glenwright added that because the Government left it until two years before the introduction of the new tax system to release details of the proposed rates, drivers had already chosen cars, unaware of the consequences of their actions.

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