If you really want to pick fault with company car

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Mon 10 Dec 2001 08:43
If you really want to pick fault with company car - Paul Robinson
Yesterday I got caught defending one aspect of the new company car tax regime, so to show that I?m not working undercover for the treasury, I?d like to make the following point:

Imagine you have just chosen your next company car, let?s assume a popular choice - because it?s a lovely car and has an attractive CO2 g/km tax rating (but any car would do) so, you?re looking forward to collecting a Peugeot 406 2.2HDi 136 GTX.

If you allow your employer to provide fuel for private use in this company car, the Inland Revenue will include in your income tax affairs an annual ?fuel scale charge? of £3,620. In other words you will be taxed as if you received an additional £3,620 income i.e. the fuel provided for private use is worth £3,620 p.a.(£302 per month).

Your employer will also have to include an adjustment in their VAT return as they are not allowed to reclaim the VAT paid on private fuel provided. They too impose a ?fuel scale charge? but for this car it would be £1,145 p.a.(£95 per month).

So for the same fuel provided for private use to the same company car is assumed to be worth £95 per month for VAT purposes and £302 per month for income tax purposes.

Why such a huge discrepancy between H.M. Customs and Excise and H.M. Inspector of Taxes??? Absurd isn?t it!
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