§ Mr. Andrew SmithTo ask the Chancellor of the Exchequer how the scale charges in relation to the taxation of company cars are calculated; what are the independent studies he was referring to in his Budget speech; and what was the detailed basis of his calculation that an employee with a typical company car may be taxed on only about a quarter of its true value.
§ Mr. Brooke[holding answer, 21 June 1988]The scale charges introduced in 1976 have been increased each year on a percentage basis. My right hon. Friend the Chancellor of the Exchequer takes a number of factors into account in deciding the appropriate level of increase for any year. One of these is the value of the benefit to the employee. Various independent studies appear annually quantifying the benefit of having a company car available for private use. They use a variety of methods to estimate the benefit and some—for example, Income Data Services top pay unit report and the PA Personnel Services annual fringe benefits report—base their calculations on figures of motoring costs collected by the AA. Although the results naturally vary in detail, the broad picture emerging from such studies was consistent with the Government's own view that the 1987–88 car scales represented only about a quarter of the value of the benefit.