Fleet News

Lex in bid to ease high mileage hell for drivers

COMPANY car drivers could 'lose' up to £2,000 a year from their pay packets with calculations showing that in the worse cases, high mileage drivers could see their tax bills rise from a 15% tax charge to 35% under the 2002 carbon dioxide-based tax regime. Figures produced by research consultancy Market Dynamics reveal that the impact of the tax changes on high mileage drivers will either 'penalise hard-working mid-income employees' or be inflationary as employers seek to compensate their employees for loss of earnings.

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.

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment

Comments

No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee