THE new emissions-based company car tax system will see the traditional company car triumph over cash-for-car schemes, according to the director-general of the British Vehicle Rental & Leasing Association.

John Lewis said the supposed growth in cash allowances replacing company cars had been pushed by the relatively high tax burden on employees who drive fewer than 2,500 business miles a year.

They currently pay company car tax based on 35 per cent of their car's list price as they fail to qualify for discounts at either 2,500 or 18,000 business miles.

The removal of any business mileage discounts under the new system 'is going to radically alter the share of the fleet market,' said Lewis. 'Suddenly the tax disincentive for these drivers disappears. More importantly the cash requirement from the employer goes up, and the very real benefits of having a company-provided car re-assert themselves.'

Lewis was speaking at the launch of the FN50, Fleet News' analysis of the UK's 50 largest contract hire companies. He predicted that by 2004 the contract hire industry will have increased its fleet size by at least 200,000 vehicles - because of the company car tax changes.

'We will see some high mileage drivers exit the system, particularly those for whom down-polluting is not an acceptable option, and opt for some form of cash option. But by the sheer nature of their use they are likely to be users of a form of fully maintained PCP or personal lease unlike previous opt-outs.'