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Inland Revenue to close double-cab tax loophole

Van makers and dealers could be hit by new taxation laws expected to be introduced next year.

Under current legislation, drivers who have private use of company vans – including some double-cab pick-ups – pay tax on a standard benefit charge of £500, with a discount to £350 for vehicles over four years old. But new proposals suggest van drivers will be taxed at higher levels, depending on how much private use they have of the vehicle.

Critics of the current policy, which many see as a loophole in the system, say the proposed changes would help address rocketing demand for double-cabs with a payload of more than one-tonne. These vehicles are classed as vans, but are increasingly being used as company cars.

Manufacturers like Mitsubishi and Nissan have enjoyed booming double-cab sales as a result, “It is general knowledge that light commercial vehicles are experiencing a surge in popularity among company car drivers,” says a leading accountant. “The reasons for this are not hard to discern. The taxable benefit of a company car is being taxed more and more heavily while a commercial vehicle, such as a double cab pick-up, attracts a taxable benefit charge of just £500 per year including free fuel.

“The Inland Revenue has issued a consultation paper which gives a number of options – all of those options would result in the taxable benefit of light commercials being increased to more or less car tax levels. We are recommending that our clients expect these tax changes to take effect from April 2004.”

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