COMPANY car drivers affected by congestion charging have won a multi-million pound tax concession from the Inland Revenue following a major investigation by experts. If drivers have all their congestion charges paid by their employers, including bills for private use, they will not be charged tax on the benefit.

Experts originally feared the opposite would be true and that drivers would face bills running into hundreds of pounds if their employers paid the congestion charges or would have to deal with huge volumes of administration to prove that all tolls companies had paid for were for business journeys.

The Inland Revenue announcement only affects company car drivers, as they are not the registered keepers of vehicles. If drivers in private cars have all their congestion charging bills paid, they will be liable for tax.

Tax expert Deloitte & Touche carried out the investigation and announced the results last week, forcing the Inland Revenue to change incorrect statements on its website.

A Deloitte & Touche spokesman said: 'Currently the reimbursement of a business expense is tax-free and the reimbursement of a personal expense is taxable. The cost of commuting is a personal expense, so one would expect that the reimbursement of the congestion charge would only be tax-free where the employee had to drive into the central charging zone for a business engagement away from the normal place of work and for no other reason.

'But Deloitte & Touche has examined the detail and for company cars and vans, it believes the reimbursement should be tax-free – even for commuters. This will come as a considerable surprise. After all, employees driving their own cars don't have this advantage, nor do the self-employed.

'The exemption is also not available in the same way for pooled cars and vans.' The announcement will save higher rate taxpayers £470 a year if they commute into the zone five days a week.

Guidance regarding congestion can be found at www.inlandrevenue.gov.uk/cars/concharging_tax.pdf.