The consultation document setting out the changes is open to comment until the 31 July 2003 and proposes that employees that use company vans for private trips be taxed based on the CO2 emissions of the vehicle instead of the existing £500 scale charge.
In addition, the Inland Revenue plans a different basis of taxation for employees that use a company van occasionally compared to those that use it more regularly.
According to E&Y, the proposals will result in an increase in the tax liabilities for employees, while employers who will see an increase in Class 1A national insurance liabilities.
Furthermore, companies maybe be forced to compensate employees that use their vans, as they are unlikely to have any choice over the type of vehicle they use.
‘We urge employers to respond to the consultative paper within the time specified to ensure the Inland Revenue is aware of the impact of the suggested changes,’ the firm said.
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