THE emissions-based company car system has been a massive success in reducing the emissions from Britain's fleets, business mileage, fuel costs and administration for businesses, the Inland Revenue has claimed.

In its Report on the Evaluation of the Company Car Tax Reform, the Inland Revenue claimed there had been a reduction of 300-400 million business miles travelled after the Government scrapped the old tax system which offered incentives to drivers who covered high mileages.

The report said: 'Business miles travelled are no longer taken into account in calculating the company car tax charge.

'We estimate that removing the incentive to travel more miles has directly led to a reduction in business miles being travelled in company cars in the UK in 2002/03 of between 300-400 million miles and that this will continue in subsequent years.

'The reduction in business miles is estimated to equate to a reduction of 25,000 to 35,000 tonnes of carbon emissions in 2002/03.'

The report found that the average level of emissions from company cars had dropped by 14g/km to 182g/km and was on track to hit long-term emissions targets.

It said: 'Our research suggests that the average CO2 emissions of new company cars has decreased significantly from a level of about 196 grams per kilometre (g/km) in 1999 (when the intention to switch to a new company car tax system based on environmental principles was first announced by the Government) to about 182g/km in 2002.

'We believe that the company car tax reform has played a significant part in reducing levels of CO2 emissions in the UK and we estimate that in 2003 there will be a reduction of about 0.15 to 0.2 million tonnes of carbon due to the reform. This is fully on track to meet our long-term target of reductions of 0.5 to 1 million tonnes of carbon per year.'

Furthermore, business compliance costs have been slashed by £35 million, it said, nearly 100% more than originally expected when the new tax was introduced.

However, the Inland Revenue believes that although most drivers are aware of the emissions-based system, many do not understand exactly how it works. It said: 'We consider that although the level of awareness of the company car tax reform has been extremely good, understanding of the finer detail and financial implications has been less so.'

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