It is sticking to its forecast that April's changes to benefit-in-kind taxation, and the introduction of the carbon dioxide based company car tax system, will attract 400,000 new and lapsed company car drivers, but see 200,000 switch to alternatives, representing an incremental gain of about 200,000 cars.
Its comments provide the first official confirmation that the anticipated changes from the launch of the environmentally-driven company car tax system are going to plan. Ministers expect the new system to entice drivers back into low emission, low tax business cars.
One ministerial letter said: 'Many company car drivers will be paying less tax for the benefit of their company car under the new system.
'Having a company car with relatively low carbon dioxide emissions would help to ameliorate tax liabilities under the new system for any driver.
'The reforms will lead to a net increase of around 200,000 company cars in the long term'.
By contrast, critics claim rocketing demand for cash-for- car schemes will cut business driver numbers by 100,000.
But Carolyn Mason, Inland Revenue policy adviser, said: 'The estimate of a 200,000 increase in the number of drivers comes from our economists and we do not think their views have changed.
'We are conducting a detailed review of the effect of the new taxation system, which will consider in detail factors including the number of company cars and the yield they provide for the Inland Revenue.'
Reinforcing this claim, fleet sales for the year-to-date are heading towards an all-time record. By the end of July, total sales had reached 644,498, 4.7% ahead of the same period last year, which was the best on record.
Fleet sales also show that company car drivers are heeding the Government's environmental steer by switching to low CO2-emitting diesel cars, with fleet diesel sales up 47.8% year-on-year, compared to petrol sales, which are down 6.4%.
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