IR7                                                       29 November 1994                                                      
                                                              
               COMPANY CARS AND THE DISABLED

The Chancellor proposes in his Budget to make a change  to the  
company car tax rules so that the costs of converting a  company car 
for use by a disabled person will no longer be  included in 
calculating the taxable benefit of private use of the car.

This will take effect for the 1995/96 tax year.

                          DETAILS

1.  The  benefit of private use of a company car is  now calculated
as 35 per cent of the price of  the  car  plus accessories, either 
factory-fitted or fitted later.

2.  Where  a company car is converted to suit a disabled person,  
the costs of supplying and fitting the conversion are  treated like 
other accessories.  So the employee pays a  higher  income tax 
charge, reflecting the higher  total price of the converted car.

3.  The Chancellor proposes that accessories designed for use  only 
by  the  disabled shall be  excluded  from  the accessories that 
increase the car benefit charge.

4.  The cost of the proposal will be negligible.

                     NOTES FOR EDITORS

1.     From   6   April  1994,  the  income  tax   benefit 
attributable to a company car has been set at 35 per  cent of  the 
car's list price.  The benefit is reduced by  one- third  if  between
2,500 and 18,000  business  miles  are driven  in the year;  and by 
two-thirds if 18,000 or  more business  miles are driven.  There is a
further  reduction of  one-third  of the amount after allowing  for  
business mileage if the car is four years old or more at the end of 
the tax year.

2.     For second cars,  the  mileage  discounts   are respectively  
reduced  to nil and  one-third.   There  are special rules where the 
price of the car exceeds  pounds 80,000 and  for "classic" cars. An 
employee's capital contributions, up to pounds 5,000, are treated as  
reducing  the list price on which the tax charge is based.

3.   Where accessories are fitted at the outset, the price of  the  
car  is increased by the price of the  accessory.  Where  an  
accessory  with a price  of  pounds 100  or  more  is subsequently fitted, 
that similarly adds to the  price  of the car for car benefit 
purposes.

4.    The  Chancellor's proposal is aimed  at  accessories designed  
specifically  for the disabled,  as  opposed  to accessories  (such  
as automatic transmission)  which  are primarily  aimed  at  the  
able-bodied  even  though   the disabled also make use of them.