Schedule 28
Finance Bill
1:30 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
It is a great pleasure to serve under your chairmanship, Mr. Hood, I believe for the first time in this Bill Committee. I assume that the Exchequer Secretary will be dealing with this schedule. May I formally welcome her back to the Treasury? I know that this is not the first time she has been a Treasury Minister. Perhaps she is following the example of the Financial Secretary as a serial Treasury Minister. I do not know whether she will reach his total number of spells in the Treasury—I suspect she will not do so in the immediate future.
Schedule 28 deals with provisions regarding taxable benefits that arise from cars being made available to employees by reason of their employment. I have a couple of queries that I would like to raise with the Exchequer Secretary. The first matter is the abolition of the current £80,000 list price cap, which will lead to higher tax charges for individuals using more expensive cars. The Institute of Chartered Accountants in England and Wales asked whether that proposal will have an impact on the UK car industry, because the UK car industry produces a number of cars that would exceed the £80,000 list price cap. I would be grateful if the Exchequer Secretary said whether any assessment has been made of that impact.
The second issue is directly relevant to provisions regarding the taxable benefits that arise from cars being made available to employees by reason of their employment. I will mention briefly a slightly specialist point, and, to be fair to the Exchequer Secretary, it is a matter that she may find easier to respond to in writing. In April, through correspondence, I raised with her predecessor the issue of car dealership employees who are taxed on their use of demonstrator cars. The problem relates to those employees working for car dealerships who use demonstrator cars for their own private use. It has long been accepted that it would be inappropriate to tax that benefit in kind in exactly the same way as company cars are usually taxed. It is likely that the employee will use more than one car or that they have no choice over which car to drive. The car that the employee drives is likely to be disproportionately expensive compared with their salary.
As a consequence, a system has developed whereby HMRC has looked at a range of models and averaged a value to calculate a figure for the relevant benefit in kind. A new system was introduced in April that still works on the basis of averaging the value, but it is done on narrower bands. I have received representations from car dealerships and manufacturers because the consequence of that is likely to be that more car dealership employees pay tax. In addition, the measure is likely to increase the administrative burden on car dealerships. As I said, I have raised that point previously in correspondence, but given that schedule 28 deals specifically with taxable benefits and cars, I have taken the opportunity to raise it again.