THE Government is expected to announce plans to reform company car tax in next Tuesday's pre-Budget report. It is expected that central to the reforms will be the proposed abolition of the existing 2,500- and 18,000-mile tax breaks, which the previous Conservative Government declared were sacred in the run-up to the 1994 reform of company car taxation.

The new company car benefit-in-kind system is expected to focus on taxation of private mileage clocked up in company cars. With full industry consultation to take place prior to the introduction of change it is unlikely that the introduction of a new system would be before April 1999.

Chancellor Gordon Brown is expected to outline the proposed new company car tax system in the House of Commons on Tuesday in his widely leaked pre-Budget report. However, the Treasury has already indicated that it would contain no firm policy measures and that there would be no immediate or retrospective taxation changes.