Taxable benefit of cars: price of automatic car for disabled employee

We now come to amendment 72.

With your permission, Mr. Hood, as the amendment is technical in nature, I should like to include in the debate on it my remarks on clause stand part.

Does the hon. Gentleman mean that he does not want to move his amendment?

No, I want to move the amendment, but it may be helpful if I also include my general remarks on clause 54, if that is acceptable. If not, I will deal with the amendment separately.

I would prefer you to deal with the amendment separately. Then we can have the stand part debate.

Thank you, Mr. Hood, for your guidance.

I beg to move amendment 72, in clause 54, page 26, line 6, leave out

‘at or about the same time’ and insert

‘in the same registration period’.

The amendment seeks to amend one of the elements of the clause. The clause provides that for disabled drivers of automatic cars who hold a disabled person’s badge, the list or notional price of an equivalent manual car will be used instead of the list or notional price of the automatic car that they actually drive when computing the car benefit charge if it produces a lower taxable benefit. This removes the disadvantage that some disabled company car drivers might face when they must drive an automatic car because of their disability.

Subsection (3) defines an “equivalent manual car” as a car that

“is first registered at or about the same time as the automatic car”.

The phrase “at or about the same time” seems a bit vague. The amendment would replace it with the phrase “in the same registration period”. It is simply an attempt to provide additional clarity. There may be good reasons for the current wording, but the amendment was suggested by CIOT and is much more precise.

I urge the Committee to resist the amendment. As the hon. Gentleman suspected, there is an extremely good reason for the current wording,  which states that the relevant car price should be that for an equivalent manual car that is registered at or about the same time as the automatic car. This definition has been used in legislation for seven years and HMRC has received no representations that it is difficult to use in practice. However, if the Opposition amendment were accepted, things would immediately become far more complicated. If a reference period of six months were used, it would not be at all clear what the relevant price of a manual car would be for comparison purposes. Car list prices can change within registration periods, often quite dramatically, so the suggested wording would not always lead to a single figure. Indeed, it might encourage all sorts of negotiation about what the correct figure should be. We think that that would lead to unnecessary complication.

Without wishing to paraphrase the thoughts of my hon. Friend the Member for South- West Hertfordshire on the matter, surely the registration period is an entirely certain period of time—six months. What does she understand the phrase “at or about the same time” to encompass, either from her own experience, or from any non-representations that she has had over the past seven years from interested parties?

It is exactly what it says on the tin. The fact that nobody has complained about it in the past seven years means that people understand what “at or about the same time” is. It is a price that is available at or around the same time. I suppose the word “around” is used because at that precise moment there may not exactly, at that infinitesimal moment in time, be a precise comparison and so it is a reasonable time period to use. If the amendment were accepted, it could lead to some disabled drivers paying more in income tax, and that is certainly not our intention. We want to give disabled company car drivers certainty about how they will be supported through the tax system.

If it is open to abuse, disabled drivers would find the best comparison price to reduce their tax liability; they would not put in a price that would actually increase their tax liability.

Well, that is not at all clear from the wording that his party is proposing. There could be all sorts of different prices out there in a six-month period. There could be a price one day that is very different from a price 10 or 15 days later. There is the additional complication of burden of proof, either on one side or another, whereas the current system is easy to understand and easy to administer, so I do not see the point in changing it.

Does the Minister think it is possible that a registration within the same registration period would not be at or around the same time? It seems to me that our amendment actually narrows the requirement, rather than widens it. I am not sure that her case is quite as strong as she makes out.

I am sorry if I am not making the strength of my case clear, but perhaps I will try again. The list prices of cars can change quite dramatically during a registration period, which is currently six months.  It is not clear, therefore, what the relevant, appropriate price of an equivalent manual car would be. However, if the legislation says “at or around the same time”, then clearly, as the last seven years’ experience has shown, it is the price available at or around the same time that is taken, as opposed to any price over a six month-period, which could vary quite widely.

Mr. Gaukerose—

If the hon. Gentleman wants to try again, I am happy to take him up on it.

Let me make it clear. I have no doubt of the strength of the way the Minister is putting her case, I just think that that strength is unwarranted. Could she be clear? Does “at or around the same time” mean essentially the nearest time to the date of registration of the automatic car? If that is the case—the wording is not as clear as it might be—then she does have a stronger case.

That is the case, which is why my argument is stronger than that which the hon. Gentleman is proposing.

Finally, I may be persuaded by the Minister. With a certain amount of persistence, she may well have articulated her case, in which case I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr. Hood, you anticipated that I have one or two remarks to make on the clause.

We have already touched on the essential purpose of the clause. However, I just want to make one other point. The application of the clause is based upon an employee holding a disabled person’s badge. The LITRG, at the prompting of the charity Mobilise, has questioned whether the blue badge scheme is sufficiently wide to include everyone who needs to use an automatic vehicle. For example, it has stated that

“single amputees do not necessarily qualify for a blue badge, but do need to drive an automatic”.

Consequently it goes on to say:

“It would be interesting to know why a definition linked to the disabled badge scheme” has been used in the clause.

The LITRG also noted another issue that is worth highlighting. The issue of disabled badge holders arose earlier, of course, in our considerations, in the debate that the Exchequer Secretary had with my hon. Friend the Member for Fareham about the definition used in paragraph 22 of schedule 11. I shall quote from that debate, in which the Exchequer Secretary responded to a question from my hon. Friend about why that particular provision could not be simplified to include disabled badge holders:

“The hon. Gentleman then asked specifically why in paragraph 22 we do not simply use the qualification criterion of a person holding a disabled badge. The answer quite simply is that the power to award a badge is devolved to local authorities and we wanted to ensure that we had a comprehensible and tighter set of criteria, so that the system and the resources are properly targeted  on those people who need our support.”——[Official Report, Finance Public Bill Committee, 9 June 2009; c. 234.]

I would be grateful to the Exchequer Secretary if she could explain why the disabled badge qualification was inappropriate for paragraph 22 of schedule 11 but is appropriate for clause 54.

For the clause to work effectively, it will be necessary to publicise the new provisions contained within it. I should say first that we welcome the intention behind the clause; the clause is seeking to do something that is very worthwhile and just. However, as I say, if the clause is to work effectively it will be necessary to publicise the new provisions, so that employers and employees know what information to provide to HMRC to obtain the correct 2009 tax coding restriction. I would be grateful if the Exchequer Secretary could say what steps were being taken to publicise the provisions in the clause.

I want to make a brief contribution on a tangential issue that arises here. My hon. Friend has rightly said that it is up to local authorities to determine whether or not an individual qualifies for a blue badge. As someone who represents a central London constituency and two central London local authorities within that constituency, I would be very reluctant to see any move away from local authorities having that power. I appreciate that it may not be in any way in the Treasury’s thinking at the moment, but I strongly oppose any suggestion that the mechanics of the blue badge disabled driver system should be determined at a national level.

Westminster city council is working closely on this issue with a number of neighbouring and non-Conservative local authorities, such as that in the London borough of Camden; in fact, Camden is of course now under Liberal and Conservative control. Westminster city council feels very strongly that it should continue to have autonomy in awarding such badges and that a national badge scheme would not be in the interests of disabled people. Although disabled people would like to have the opportunity of coming to central London, if they all did it would absolutely clog up the parking system in the area. I appreciate that that is a tangential point and does not necessarily represent the thrust of the comments made by my hon. Friend the Member for South-West Hertfordshire, but I wanted to put something on the record about it. It is an issue of considerable importance and a number of central London local authorities are acutely concerned that, although elements of the scheme have national resonance—obviously, in relation to tax benefits—those should not apply to the operation of the scheme itself.

It might help if I start by explaining exactly what the clause does, because the context for this policy change might answer some of the wider questions as well. The clause supports the Government’s commitment to provide help for the disabled by changing the way in which the company car benefit charges are calculated for disabled drivers who need to drive an automatic car because of their disability.

Company car drivers holding a blue disabled person’s badge are already able to use the carbon dioxide emissions figure of an equivalent manual car when calculating their company car benefit, in place of the figure for an  automatic car, which is usually a higher-emitting vehicle. The logic is that, because automatic cars emit slightly higher amounts of CO2 per km than the equivalent manual car, it is unfair that people who have to have an automatic car because of a disability that they cannot control should be penalised through the taxation system. We are making the system slightly more generous for people in that category by saying that such drivers would also be able to use the list price of an equivalent manual car to work out the benefit charge instead of the list price of the automatic car that they currently drive. That is usually to their advantage, because of the price differential between two equivalent models.

The clause would simply align the methods used to determine the list price and the CO2 emissions figures. It is a logical tidying-up exercise, but it also benefits disabled company car drivers, so it should be supported. I welcome the support from the official Opposition spokesperson. Both methods of calculating benefit will now be based on an equivalent manual car, if that is more beneficial for the disabled driver. If it is not, that does not have to be so.

Just for the record, and subject to certain conditions, the cost of accessories provided for disabled drivers is also excluded from the calculation of the company car benefit charge.

The hon. Member for South-West Hertfordshire was perhaps making two arguments that pointed in different directions. He asked, first, about disabled drivers who do not hold a blue badge and whether they should also be included. The blue badge provides a clearly defined test of disability, it has worked in this area of policy in the past and there is no proposal to change it. However, it is worth stating clearly that, in exceptional cases, affected individuals in particular circumstances will be able to contact HMRC to seek guidance about whether there is any flexibility or any prior agreement that can be reached.

Having argued that the scheme should, perhaps, be more generous, the hon. Member for South-West Hertfordshire questioned whether it could be made tighter by using the definition that we debated earlier in the week in relation to capital allowances, which also applies in respect of vehicle excise duty and is tighter than the one that applies in this area of policy.

Perhaps I can take the Minister back a moment to her suggestion that somebody who is not eligible for the blue badge may be able to seek guidance from HMRC and may benefit from the scheme. That is welcome, but I should be grateful if she reconciled that with the wording contained in clause 54(5), which contains new section 124A of the Income Tax (Earnings and Pensions) Act 2003. It states:

“This section applies...at any time in the year when the automatic car is available to the employee (“E”), E holds a disabled person’s badge”.

That flexibility does not appear to be contained in the legislation. I should be grateful if she clarified that point.

I cannot possibly begin to describe the circumstances, because those will depend on the individual’s situation. If people feel that, in their individual circumstances, it could apply to them, HMRC is saying  that individuals who are affected should contact it first before applying and it will be happy to have that conversation. If I can provide further detail, I will.

I was discussing why the gateway for disabled company car drivers is different from that in other policy areas, such as capital allowances and vehicle excise duty. The policy aim has a different origin. For example, in vehicle excise duty, the disability exemption is a total exemption from paying that duty to help those who are practically unable to walk to be driven or to drive themselves, whereas in company car tax, blue badge holders are allowed to substitute only the CO2emissions, and now the list price, of an equivalent manual car when calculating the company car benefit, to give them parity with able-bodied drivers under law.

The main point is that we are taking an existing policy that works well and simply making it slightly more generous, because we think that there is a logical policy reason to do so. We are not seeking to open a debate about the definition of disability across the taxation system. The policies have different rationales, which is where the differences arise.

I take the point made by hon. Member for Cities of London and Westminster about the burden on councils. I hope that he will be reassured that we are not opening up the entire blue badge scheme, so the relevant council officials can rest easy. Question put and agreed to.

Clause 54 accordingly ordered to stand part of the Bill.