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Used car boost from company car tax system

Used car dealers are benefiting from a dramatic fall in the number of people taking company cars as drivers opt out of traditional schemes and head for the showroom.

A new report from the Inland Revenue shows that Britain's annual company car sales have dropped by 250,000 since the introduction of the carbon-dioxide car tax scheme just over two years ago. Since the changes were made to benefit in kind taxation, annual fleet car sales have fallen from 1.6m to 1.35m. Motorists, fed-up with being penalised for driving job-need cars, are handing back the keys and choosing cash for car schemes – and many are spending the money on used cars.

That's good news for dealers: since 2001, the number of used car buyers has grown from 6,747,419 a year to 7,527,176 – an increase of just over 2.22m, according to figures from the Society of Motor Manufacturers and Traders.

The Government introduced the new tax regime to help curb Britain's CO2 emissions as part of a wider initiative to cut greenhouse gases. But if more drivers choose to run older cars, experts warn this could be having the opposite effect.

An SMMT spokesman says: “While we believe that changes to company car taxes have helped to increase the number of low CO2-emitting vehicles, the lack of stability in the system has confused many drivers. That may be driving them out of the cleaner new car market.”

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