§ Mr. JenkinTo ask the Chancellor of the Exchequer (1) if he will assess the benefits of charging the benefit in kind taxation paid by an employee in receipt of a company-provided car on the cost of purchasing the car by the employer; [142740]
(2) for what reason the benefit-in-kind taxation paid by an employee in receipt of a company-provided car is calculated on the retail price of the car; and if he will make a statement. [143566]
§ Dawn Primarolo[holding answer 14 December 2000]The company car tax charge is based on the car's list price at first registration as this is easily obtainable and is the fairest figure on which to base the charge. Introduced from April 1994, this was the preferred option of the majority of those who responded to the 1992 consultation on the reform of company car taxation. It ensures that employees driving identical cars of the same age pay the same tax. List price will therefore continue to be used when the company car tax system is reformed from April 2002.
Basing the tax charge on the cost to the employer of providing the company car would create inequities between employees driving identical cars. However, in recent weeks most car manufacturers have reduced their list prices. This means company car drivers will accordingly pay less tax as their cars are replaced.