New pitfalls for the company car

ANYONE choosing a new company car from the K registration models arriving in showrooms should think twice about picking those likely to be taxed more heavily under new Inland Revenue proposals, accountants warned yesterday.

The aim of the proposals is to tax cars on their price. This replaces the present system based mainly on engine size.

Brian Friedman, managing director of Stoy Benefit Consulting, calculates that people driving cars bought for up to pounds 12,000 will pay less tax under the proposals, expected to come into effect in 1994. Those with vehicles costing pounds 12,000 to pounds 19,000 would be worse off. The tables turn again in the driver's favour up to pounds 42,000, but then tax bills are expected to jump.

If employees are choosing a cheaper car they need to ask their employer what they will get to make up the difference. They could have it topped up with cash.

David Rothenberg, of the accountants Blick Rothenberg, advises people to 'think twice' before buying a car in the high-risk price brackets.