EC approves UK change to VAT regime for company cars
Wed 27 September 2006
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The European Council of Ministers has approved a request from the British Government to change the VAT regime relating to the purchase of fuel for company cars used for private purposes to a system based on carbon dioxide emissions.
ENDS reports that under EU rules, member states must request authorisation to alter their VAT system from the common EU approach. The current system in the UK is based on the type of fuel and engine size of the car.
The UK's request for the VAT derogation was announced in the 2005 Pre-Budget Report. The government says the new CO2-based system will achieve the same objectives as the old system while increasing accuracy.
The derogation, approved by competitiveness ministers, runs from May 2007 until the end of 2015, when it will be reassessed.
Related Links
ENDS story link (Energy section)
2006 Budget - Environment Section (See para 7.81)
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