Company car drivers face paying thousands more in tax under new plans to be announced this month
- Drivers of low-emission vehicles will be the worst hit under the plans
- Chancellor Philip Hammond could reveal changes in Autumn Statement
- Tax rates, which are now at 7 to 11 per cent, could increase to 45 per cent
The government may scrap low tax rates for employees who make use of company car schemes, it has emerged.
Philip Hammond could reveal the changes, which could lead to 300,000 drivers paying more tax, in the Autumn Statement.
The government may scrap low tax rates for employees who make use of company car schemes, it has emerged. File image
Motorists who use low-emission vehicles would be the worst hit, with tax rates - now set at seven to 11 per cent - increasing to the marginal rate of 20, 40 or 45 per cent.
This would mean an employee driving an eco-car in the 40 per cent tax bracket would have to pay more than £5,000 over a three-year company car contact, The Sunday Telegraph reported.
This would make the schemes far less tempting.
The move is thought to be the result of concerns that companies are reducing the salaries of staff on the schemes, leading to lost revenue for the Treasury.
Mary Glindon, a former member of the transport select committee and the Labour MP for North Tyneside, opposes the changes
Mary Glindon, a former member of the transport select committee and the Labour MP for North Tyneside, opposes the changes.
Mrs Glindon told The Sunday Telegraph company car drivers should not be punished for 'doing the right thing'.
She added that the changes would remove incentives for low-polluting vehicles.
Former Chancellor George Osborne had previously warned popular salary sacrifice schemes could be curbed.
These can also be used for benefits such as gym membership and car parking spaces.
Campaigners said the majority of people who benefit are basic rate taxpayers – who have endured years of meagre pay rises – rather than executives.
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