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Stealth tax on mileage claims

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    Stealth tax on mileage claims

    I caught something about this on breakfast this mrning, but could only find an article from a few months ago, if it's being brought up again then looks likely this could be in the budget.


    Tax threat to drivers using own cars for work
    By David Millward, Transport Correspondent
    Last Updated: 2:23am BST 19/05/2007
    Millions of drivers who use their own cars for work face sharply increased taxes under proposals being considered by ministers, it was confirmed last night.


    Motorists driving 10,000 miles a year for work
    could face an extra tax bill of £500 to £1,500


    Even those doing voluntary work could be caught by a scheme drawn up by Revenue and Customs.

    Those who could be affected range from salesman to vicars in sprawling rural parishes.

    Should the idea be adopted, a motorist driving 10,000 miles a year for an employer could face an additional tax bill of £500 to £1,500 annually.

    The plans were described as another "stealth tax" by Chris Grayling, the Tory transport spokesman.

    advertisementThe potentially radical reforms were attacked by motoring groups and the voluntary sector and even alarmed the Church of England.

    Details emerged as the Government prepares to introduce a Bill allowing for road pricing pilot schemes in several parts of the country.

    At present, anyone who is reimbursed for using their own car is entitled to claim 40p a mile for the first 10,000 miles without facing tax. After that anything paid over 25p a mile is subject to both tax and national insurance.

    Last night, Revenue and Customs confirmed that the tax penalty would apply to those using their own cars for work.

    It floated the idea at a recent meeting of firms providing company car fleets. It was suggested that the tax threshold be reduced or linked to the environmental friendliness of a car.

    The 40p allowance would be slashed to 25p for those using cars with CO2 emissions above 185 grams per kilometre. So anybody driving 10,000 miles for work could be £1,500 a year worse off.

    The scheme would apply not only to new gas guzzlers but older family cars with less efficient engines. That would mean vicars using large and inexpensive older cars to get around their parishes could end up paying tax.

    This represents the latest planned assault on the owners of big cars who also face higher parking charges in some parts of the country and the prospect of a £25 congestion charge in central London.

    Conversely, as part of the Government's green agenda, drivers using cars with CO2 emissions below 135 grams per kilometre may be allowed to claim 50p a mile tax free.

    More modest proposals, which would hit around half a million drivers, entail limiting the 40p tax free band to the first 6,000 miles.

    The £1,500 figure, which was calculated by Masterlease, a fleet management firm, is based on the additional 15p per mile which would be taxable if the Government links mileage rates to CO2 emissions.

    With the tax regime discouraging the use of company cars, more people have turned to buying their own and getting their employer to reimburse the running expenses.

    Losers under the proposed regime would include owners of cars such as a BMW 320i and an array of Fords, including the two-litre Focus Duratec. Winners would include those with a one-litre Peugot 207 and one-litre Vauxhall Corsa.

    The AA condemned the proposals, maintaining that the realistic cost of running a car was about 43p a mile.

    "We fear that if the untaxable allowance for cars covering six to 10,000 miles is virtually halved from 40p to 20 or 25p, workers and volunteers driving longer distances, particularly in rural areas, will lose out substantially," a spokesman said.

    "They may refuse to allow their cars to be used for work, heaping overheads on business, voluntary and community health organisations who have to use more expensive alternatives to keep their staff mobile."

    "This will hit our volunteers in remote rural areas," said a spokesman for the WRVS "We are very concerned."

    Similar concern was expressed by Lambeth Palace. A spokesman said: "We understand the importance of limiting unnecessary car use, but it would be unfortunate if the unintended consequence of this was to reduce the capacity of clergy to serve their local communities, especially in rural areas."

    Mr Grayling rounded on the Government for considering the plans.

    "These figures appear to bear no relation at all to the cost of running a car," he said.

    "My big fear is that the losers would be people providing an array of public services and volunteers who do a lot of mileage supporting people in their homes and doing.

    "Once again the Government seems set on trying to hit people in their pockets by changing the small print."
    The court heard Darren Upton had written a letter to Judge Sally Cahill QC saying he wasn’t “a typical inmate of prison”.

    But the judge said: “That simply demonstrates your arrogance continues. You are typical. Inmates of prison are people who are dishonest. You are a thoroughly dishonestly man motivated by your own selfish greed.”

    #2
    Another good reason to vote Labour.

    Labour, tough on small business, tough on the causes of small business.

    @ssguru will be okay on his bicycle though.

    Comment


      #3
      Not sure how this will work for cars pre-March 2001 which aren't rated for CO2 emissions.
      Cats are evil.

      Comment


        #4
        Couldn't they link it to the MOT emissions test?
        The court heard Darren Upton had written a letter to Judge Sally Cahill QC saying he wasn’t “a typical inmate of prison”.

        But the judge said: “That simply demonstrates your arrogance continues. You are typical. Inmates of prison are people who are dishonest. You are a thoroughly dishonestly man motivated by your own selfish greed.”

        Comment


          #5
          my car is 137g/km

          Although I would just drive more miles to get the same amount out the company tax free. Who says you have to use the most efficient route home - or at least pay yourself for the not the most efficient.

          Comment


            #6
            Originally posted by Bagpuss View Post
            Couldn't they link it to the MOT emissions test?
            Afaik that is just pass/fail. You get numbers but I don't think these are recorded and think of the hassle that happened last time.

            Also maintaining that info for a company would be a right pain in the arse.

            Comment


              #7
              They'll probably base it on engine size:

              http://www.direct.gov.uk/en/Motoring...le/DG_10012524

              I.e. > 1549 cc
              Cats are evil.

              Comment


                #8
                What a ridiculous piece of social engineering.

                All that will happen is that peeps with big cars will refuse to use their cars for work and companies will have to hire one in.

                How are theiy going to know anyway. I could easily claim that I went in my SO's metro whilst actually going in my roller.

                tim

                Comment


                  #9
                  Originally posted by tim123 View Post
                  What a ridiculous piece of social engineering.

                  All that will happen is that peeps with big cars will refuse to use their cars for work and companies will have to hire one in.

                  How are theiy going to know anyway. I could easily claim that I went in my SO's metro whilst actually going in my roller.

                  tim
                  You'll probably have to record the car's registration with your mileage claim. But what happens if you drive a courtesy car for a week?! It's a farce.
                  Cats are evil.

                  Comment


                    #10
                    Perhaps EDS would like to quote a few £ billion for a database for HMG to record every car you use for every journey?

                    Comment

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