Company car loophole investigated
Executives who drive fuel-guzzling four-wheel-drive company vans to gain tax benefits will find themselves stung by this year's Budget, which attempts to remove their tax breaks.
Link: Budget 2003
It has long been known that posh vans with an extra set of seats are exploited as a taxable benefit because they cost only £500, whereas cars are taxed at a significantly higher level.
The government now intends to consult on proposals to bring the vans in line with car taxation.
This is expected to come as a shock to executives who have taken advantage of the van legislation to minimise their tax liabilities while still gaining a family vehicle.
‘This whole area is going to cause major ructions for employers, who will see employees having to possibly pay significant levels of tax,’ said Alastair Kendrick, director of tax at Ernst & Young.