For many years the fleet operator has
awaited the day when his company car drivers all hand back their car keys. Last
year’s Budget saw the saw start of progressive taxation on employer provided fuel
that will encourage the driver to elect buy his own private fuel. This year the Chancellor
announced a major change in the way company cars will be taxed from 2002. A new system
that will be based on carbon dioxide emissions will be introduced. In the years up to 2002
an interim change was announced. Rules are as follows:

The tax charge on a company car remains at
35 per cent of the price of the car, where the driver travels less than 2,500 business
miles in the tax year;

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When the driver achieves between 2,500 and
17,999 business miles the tax charge will be 25 per cent of the price of the car;

For those drivers covering over 18,000
business miles the tax charge will be 15 per cent of the price of the car;

If the car is four or more years old at the
end of the tax year the tax charge, after taking into account business miles, will be
reduced by one quarter rather than one third.

See Also:

Effectively this means that
for every £1,000 of the price of the company car the following tax will be paid per
month.

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Last year’s figures
are shown in brackets.

 

 

23% taxpayer
£

40% taxpayer
£

Business
mileage

    
     

Less than
2,500

6.71 (6.71)

11.67
(11.67)

2,500 to
17,999

4.79 (4.47)

8.33 (
7.78)

18,000 or
more

2.88 (2.24)

5.00 (
3.89)

 

For those drivers who enjoy free fuel, the
day when they will be better off paying for their own fuel draws closer. The tax payable
per month for 1999/2000 is as follows:

Last year’s figure’s are shown in
brackets.

 

 

Petrol

Diesel
 

23%
taxpayer
£

40%
taxpayer
£

23%
taxpayer
£

40%
taxpayer
£
Engine capacity        
         
0 to 1,400cc

23.19
(19.36)

40.33
(33.67)

29.52
(24.53)

51.33
(42.67)
1,401 to 2,000cc

29.52
(24.53)

51.33
(42.67)

29.52
(24.53)

51.33
(42.67)
2,001cc or more

43.51
(36.23)

75.67
(63.00)

43.51
(36.23)

75.67
(63.00)

 

In addition to the above the following
announcements were made;

A reduced vehicle excise duty (road fund
licence) of £100 for cars with engines to 1100 cc will be effective from 1 June 1999;

Vehicle excise duty for all private and
light goods vehicles will be increased by £5 to £155 effective from 10 March 1999;

Vehicle excise duty for new cars will be
determined according to their carbon dioxide emission rate from Autumn 2000;

Increases in the duty on petrol with a
proportionally higher increase on diesel (excepting ultra low sulphur diesel);

A cut in the duty on road fuel gases;

Benefit in kind payments on mobile phone
are discontinued.

For further information please contact your
local Deloitte & Touche office.