Cars:accessories for the Disabled

Clause 42 – in the House of Commons at 9:45 pm on 3rd April 1995.

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Photo of George Young George Young The Financial Secretary to the Treasury 9:45 pm, 3rd April 1995

I beg to move amendment No. 58, in page 35, line 35, leave out 'designed solely for use by a chronically sick or disabled person".' and insert 'which falls within section 168AA".'.

Madam Speaker:

With this, it will be convenient to discuss also the following amendments: No. 1, in page 35, line 36, at end insert

'and also automatic transmission and power steering where those accessories are required to permit the chronically sick or disabled person to use the car.'. Government amendment No. 59.

Photo of George Young George Young The Financial Secretary to the Treasury

I should like to speak briefly to Government amendment No. 59 and I hope that the Opposition will then not move amendment No. 1.

The amendments extend the exemptions included in the Finance Bill to exempt accessories for the disabled from an income tax charge when fitted to a company car. The amendments mean that exemptions will apply not just to special accessories designed solely for use by a disabled person, but optional accessories needed to enable a disabled employee to use the car where the employee is an orange badge holder because of his or her disability.

The original proposal was widely welcomed when we debated the measure in Committee, but there was a general feeling that we should go a little bit further. I have now carefully considered whether we can respond to that feeling without running the risks that the Committee identified of giving relief for non-disabled drivers.

We have looked again at the scope for widening the range of accessories covered by the exemption while still ensuring that those items are exempt only where they are needed by a disabled person. As a result, we propose amendments Nos. 58 and 59, which will extend exemption to include optional accessories, which a disabled person needs to use the car. That means that if accessories such as automatic transmission, power steering, electric windows, air conditioning or heated seats—all of which were mentioned when we debated the proposal in Committee—are fitted to a company car at extra cost to enable a disabled employee to use that car, the extra cost of those items will not be added to the price of the car in calculating the value of the car benefit. Only those accessories that the particular disabled employee actually needs will be excluded. Where the accessory is no more necessary than for anyone else, the extra tax charge will still be due.

An employee will be eligible for the exemption if he or she is the current holder of an orange badge because of his or her disability. As my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) said, the orange badge scheme was reviewed recently and the eligibility criteria were greatly tightened. The orange badge scheme was also mentioned by the hon. Member for Bristol, South (Ms Primarolo) and it operates under regulations made under the Chronically Sick and Disabled Persons Act 1970 and its Northern Ireland equivalent.

I believe that amendments Nos. 58 and 59 fully meet the concerns expressed by the Committee. I commend them to the House. I hope that amendment No. 1 will not be moved.

Photo of Dawn Primarolo Dawn Primarolo Shadow Spokesperson (Treasury)

I support the Government amendments. The proposals cover exactly the points that were discussed in Committee. The exemptions now provided to disabled drivers as a result of the Government's amendments mean that the discrimination that was exercised before will no longer exist.

Amendment agreed to.

Amendment made: No. 59, in page 35, line 36, at end insert— `( ) After section 168A of the Taxes Act 1988 there shall be inserted—