Been writing for a while now on my frustrations with high company car taxes.
But why are they so high? Is HMG being very clever or extremely foolish?
Interesting to look at taxes on private fuel in a company car – here’s one the Government did earlier….
The graph below shows the total tax and NI take on private fuel – the red line is the number of people still in receipt of the benefit. And yes the total income is broadly the same despite half the employees opting out over a 10 year period.
Amazingly, just over 1 in 6 company car drivers still take the benefit of private fuel despite the effective tax rate (combining employee and employer liabilities) reaching 1000% in some cases – yes, really. We wrote a report two weeks ago for a client where 90% of the drivers took the benefit and in every case received less fuel than the amount in tax they paid – the cost to the employer was truly horrific.
So – being a huge cynic – maybe this is HMGs plan for company cars (with conventional engines) – keep pushing the tax rate up in the knowledge that enough people will stay opted in almost regardless of the cost? Me – a cynic?! Who knew.