Fleet News

Company car tax U-turn hopes dashed

HOPES of a Government U-turn over its 2002 company car tax policy towards high-mileage business drivers have been dashed. Amid calls by the fleet industry for the Government to ease the future tax burden on 18,000-plus business mile drivers who could see their annual tax bills rise by thousands of pounds, the Inland Revenue says there will be no change.

Lex Vehicle Leasing submitted an alternative tax scheme to the Inland Revenue designed to ease the burden on high-mileage drivers. Last year the contract hire company pledged to fight for a fair deal for high-mileage drivers. However, Mary Braim, Inland Revenue policy adviser on transport benefits, said at the Fleet Show: 'The company car tax rules from 2002 are here to stay. Fleet managers and drivers need certainty to get on with writing their policies and choosing vehicles taking account of the new system. We have written to Lex Vehicle Leasing but what the company has suggested was taken into account when the new rules were determined. There will be no changes.'

Under the new system, the aim is to encourage 18,000-plus business mile drivers to reduce mileages and thereby achieve the Government's environmental ambition of reducing greenhouse gases. But Lex Vehicle Leasing managing director Jon Walden said he remained concerned at the impact of the new tax on high-mileage drivers. 'We still see merit in discussing a constructive alternative which will not harm the Government's environmental programme but would provide relief where it is most needed and that is for high-mileage drivers,' he said.

Lex Vehicle Leasing runs approximately 90,000 vehicles and Walden added: 'A substantial proportion of those are used predominantly for business use and without which their drivers have no alternative transportation available to undertake their employment. These people are often in selling or service roles and their vehicle is essential to their job. Under the proposed changes anyone driving more than 18,000 business miles will be worse off. In many cases, the amount of tax increase is quite substantial, many hundreds of pounds, and in some cases, more than £1,000 a year.'

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