Fleet News

Drivers cautioned against raiding the options list

COMPANY car drivers are continuing to spec-up cars 'like Christmas trees', ignorant that they are fuelling a tax bill double whammy.

From April, company car tax will be based on a combination of a vehicle's P11D price and its carbon dioxide emission figure.

Accessories costing more than £100 are added to the vehicle's P11D price for tax purposes, and can also increase the carbon dioxide emissions of the vehicle, thereby affecting negatively the two criteria on which company car tax will be based - price and emissions.

CO2 emissions can be adversely affected by items that add weight to a vehicle, or affect fuel efficiency, such as larger, lower profile tyres or air conditioning.

The worry is that drivers are selecting cars based on manufacturer figures for standard models, and will suffer a tax hit when the V5 - the only CO2 document recognised by the Inland Revenue - shows a higher emission figure than they had anticipated. This could push the car into a higher tax bracket.

Volkswagen head of fleet Vince Kinner claims cars are continuing to be 'specced-up like Christmas trees', with many drivers unaware of the tax impact: 'We only print the CO2 figure for cars with standard specification. We may have to look at giving a CO2 figure for each accessory so drivers can see exactly what they can expect from the tax viewpoint.'

While some company car drivers are off-setting potentially higher tax bills under the new system by downsizing, they are simultaneously speccing-up their new car.

Kinner said: 'Our car mix is getting richer and while drivers are choosing smaller cars, in some cases, by fitting extras they are not benefiting as much as they thought from lower tax bills.'

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