TaxPersonal TaxBrown surprises company car drivers

Brown surprises company car drivers

Employees who receive free fuel for private use in their company cars will incur lower than expected fuel-scale charges; 14% instead of the 20% previously proposed by the chancellor or even a 40% suggested by some experts.

The chancellor’s five-year programme, announced in the 1998 Budget, to increase these fuel-scale rates at a rate 20% above pump prices has been slowed by drops in the price of unleaded petrol and cuts in fuel duty.

Ernst & Young’s tax director Alastair Kendrick said: ‘This came as a surprise. People receiving this benefit were anticipating a substantial hike in the level of income tax they would pay next year.

‘This is coupled with the government’s commitment in its transport policy to cut private mileage in cars. Will this mean that the M4 will still be as congested as ever?’

In a related measure, the government has extended its tax relief on work bus places. Employees using work buses with nine or more seats will now be included. This stops the dilemma for companies that acquired smaller vehicles; they will no longer have to find more room for seats to comply with the legislation.

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Budget 2001

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