The tax code contains provisions which affect company cars in two areas: the taxation of the benefit to directors and employees derived from the private use of motor cars provided by their employers; the capital allowances and running expenses that are allowed for motor cars used for a business or employment. The charge to tax on the benefit derived from the private use of a car is levied on a "cash equivalent" based on a specified percentage of the original market value of the car. This percentage ranges from 18 per cent where the car only is supplied, to 30 per cent where, in addition to providing the car, the employer meets all running costs. Tapering relief which reduces the cash equivalent is available where business miles exceed 15,000 a year. An alternative relief, which reduces the cash equivalent by 20 per cent, is granted where specified conditions are met.
The amount of capital allowances and the deduction for running expenses granted for tax purposes in respect of motor cars used in the course of a trade, profession or employment are granted by reference to a capital limit. This limit currently stands at £15,500 for new cars. Capital allowances for cars costing in excess of this amount are limited to what they would be if the car cost £15,500. Running expenses are also restricted by means of a formula linked to that limit. The limit is set approximately at the capital cost of a 1.6 litre car. In so far as this limit restricts the amount which can be claimed, it favours small to medium size cars and discriminates against larger, more expensive and less environmentally friendly cars.
I do not accept that the fiscal regime outlined above constitutes an impediment to the objective of sustainable development.