Let's bring car perks to the end of the road

Potter, Stephen and Dunleavy, Patrick (1979). Let's bring car perks to the end of the road. New Society, 50(896) pp. 547–548.

Abstract

The Inland Revenue has proposed that income-in-kind perks, such as company cars and free petrol, be treated as taxable income. Unless an individual's income exceeds £8,500, company car perks are tax free and even when taxed the marginal rate is a third or less of that levied on earned income. This is not just an Inland Revenue issue as this impacts upon transport, energy and industry policies. Companies buy most new cars which determined the fuel efficiency of the entire vehicle stock. Company cars have larger engine sizes and poorer fuel economy than privately bought cars. Free fuel encourages users to drive more. This tax subsidy exerts a considerable influence on transport planning and politics.

Plain Language Summary

The Inland Revenue has proposed that income-in-kind perks, such as company cars and free petrol, be treated as taxable income. Unless an individual's income exceeds £8,500, company car perks are tax free and even when taxed the marginal rate is a third or less of that levied on earned income. This is not just an Inland Revenue issue as this impacts upon transport, energy and industry policies. Companies buy most new cars which determined the fuel efficiency of the entire vehicle stock. Company cars have larger engine sizes and poorer fuel economy than privately bought cars. Free fuel encourages users to drive more.This tax subsidy exerts a considerable influence on transport planning and politics.

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