THE Inland Revenue is working on new rules to impose benefit-in-kind tax bills on drivers whose congestion charging bills are paid by their employers. Tax experts are examining how they will ensure drivers pay tax on any charges they incur when journeys are for private use.

Drivers who frequently enter the capital could incur tax bills running into hundreds of pounds, unless they reimburse their employers for each private journey made.

In addition, employers could be liable for National Insurance Contributions on private journeys that are 'free' for drivers.

London is scheduled to be the first major UK city to introduce charging, with a £5 levy starting next year, although Durham already has a small scale scheme running. However, employees in charge of fleet administration could find it impossible to provide an accurate breakdown of employees business and private journeys into the capital.

They already face the mammoth task of forecasting company drivers' journeys a month in advance in order to qualify for simplified payment programmes. Millions of trips into the capital by fleet drivers will have to be logged and paid for in advance under a new scheme proposed by the Greater London Authority for firms with more than 25 vehicles.

Now employers face additional administration, as they need to take into account any private use by employees that they might not have considered.

Carolyn Mason, Inland Revenue policy adviser, said: 'If there is an element of private use then that is a benefit-in-kind and the issue is being passed to our technical department to consider more closely.'