§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer what evidence he has on the extent to which employers offer a company car instead of higher pay as an aid to recruitment; and by how much the chargeable addition to income for tax purposes for the use of a company car would have to be increased to make it uneconomic for the employer to provide and the employee to accept the use of a company car instead of an increase in pay.
§ Mr. Lilley[holding answer 27 July 1989]: The decision to provide a car instead of higher cash pay is a matter for employers. About 1.4 million employees have cars available for private use provided by their employers. The Government's policy is that there should as far as possible be neutrality between the tax treatment of remuneration in cash and kind. But the value of company cars to particular employees varies widely depending on a range of factors. It is not possible, therefore, to give a fixed point at which a chargeable addition to income for tax purposes would make company cars an uneconomic proposition for either employers or employees.