Company car tax changes

12:17pm Wednesday 20th June 2001

The company car has long been considered a perk of the job, an essential part of a good employment package, but new tax rules which come into effect next year could see an end to its popularity.

From April 2002, the current benefit in kind' tax rules where company car drivers with high business mileage (18,000 miles or more) fare best, will change as part of the government's commitment to cutting fuel emissions.

Under the new system a company car will be assessed on a sliding scale ranging between 15 to 35 per cent of the list price, depending solely on carbon dioxide (CO2) emissions. The higher the emissions, the more you will pay and the term business mileage will be a thing of the past.

The new system looks set to penalise essential car users, those covering over 18,000 miles.

Where they currently pay tax on just 15 per cent of the list price of the car (taxable benefit on a £20,000 mid-size car is currently just £3,000), under the new rules, this will shoot up to almost £5,000.

Perk' drivers, those claiming less than 2,500 business miles are currently taxed on 35 per cent of the list price, from April 2002, they will be taxed solely on emissions and should save money.

So drivers may now have to look towards smaller cars with better fuel consumption and lower emissions, or dump the company car completely.

Doves Saab of South Croydon offer an opt-out' package they believe overcomes the problem. Saab Complete' lets you know all motoring costs (except fuel) in advance, providing a complete package from servicing to motor insurance if

necessary.

This could allow company car drivers to drive their own new car and cut their tax liability.

For details call 020 8763 9321.

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