Fleet News

Brown to give an early tax warning

CHANCELLOR of the Exchequer Gordon Brown will use next year's Budget to reveal plans for company car tax until at least 2007 - and his plan is likely to shun calls for changes to the new system.

A chief adviser to Brown on company car tax has given the strongest indication yet that fleet managers will be given vital early warning of the shape of the tax system in the same way they had two years to prepare for the launch of the new CO2-based tax in just over a month's time.

Justin Jacobs, head of the Transport Tax Branch for the Treasury, told Fleet News: 'We believe in giving people long lead times. We gave a two-year lead for the last time and I would have thought it would be similar this time.'

With Budget 2003 the most likely time for an announcement, Jacobs claimed it was more than enough time for fleet managers to adapt to any changes. But he said fleet managers should not expect a radical shift in the rules.

He said: 'I would not have thought it would be radically different. We are trying to reward people who drive cleaner cars, but I would not rule out increases.'

If the changes follow the pattern set by the first three years of the regime, the starting band for the tax system in 2005/2006 would be 135g/km, falling to 125g/km in 2006/2007 and then to 115g/km in 2007/2008.

Diesel is the main beneficiary of the current system, despite the 3% supplement for non-Euro IV compliant diesels. But Jacobs denied the Government was trying to force company car drivers in one direction. He said: 'We do not favour either petrol or diesel because both fuels have different benefits.'

The UK fleet sector has faced a tortuous route to the April launch of the emissions-based tax.

Although the Treasury has given Britain's two million tax-paying company car drivers two years to adjust to the new rules, the run-up to the change has been blighted with stories of confusion, misconception and mismanagement on all sides.

As recently as November, a survey of company car drivers by Ford and Fleet News found that two-thirds had no idea how much tax they would be paying, with more than half admitting they had no clue about the CO2 emissions of their cars.

And in January, the Government revealed that 280,000 drivers had been issued with the wrong tax codes after a computer glitch.

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