Lex Vehicle Leasing has proposed a 'taper relief' scheme for 18,000+ business mile drivers while retaining the essential structure of the April 2002 carbon dioxide emissions based system - a sliding scale charge of 1% tax for every 5g/km of CO2 from 165 g/km to 265 g/km for 2002/3 with a gradual tightening up over the following two tax years. The suggested scheme would see a 1% point reduction in the tax rate for every 1,000 business miles over 18,000 miles with a minimum rate of 15%.
Market Dynamics says there will be no need for administrative systems to be changed, data on business mileage is already collated, the tapered system will avoid incentivising business drivers to 'hit' target mileages and drivers will still be incentivised to driver smaller, more environmentally friendly cars. However, it is calculated that the proposals would cost the Treasury up to £160 million in 'lost' company car tax revenue - 8% of the total benefit-in-kind tax take. But, the research also shows that if some essential company car drivers switch to privately-funded cars there would be a negative impact on the environment, as many drivers would switch to older cars with poorer environmental performance and lower maintenance standards.