The number of company cars on British roads has fallen about a quarter in past five years, from 1.6 million in 2000 to today’s 1.2 million, according to The Sunday Times.
The decline is being blamed on the changes that were made to the company car tax in April 2002. Under the old rules, drivers were taxed according to the size of their car’s engine and their annual mileage. Now, however, the tax is linked to list price and carbon dioxide emissions as part of the British government’s commitment to cut greenhouse gas emissions.
The tax is levied on a sliding scale between 15 percent and 35 percent of the list price, with the exact figure depending on the number of grams of CO2 the car produces per kilometer. For example a top-of-the-line Audi A6 Quattro – one of the higher CO2 emission vehicles – the tax can be as high as 4,200 British Pounds, or roughly $8,400 American.
Although the tax is designed to encourage company car drivers to opt for greener cars and cut their gas mileage, the tax is having the opposite effect because many employees are choosing the cash alternative offered by the employers to buy flashy sports cars or 4X4’s. The number of employees who are taking this cash option has risen steadily since the ‘90s.