Work-car tax hike is 'speculation'

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Even those doing voluntary work could be caught up by the scheme, drawn up by Revenue and Customs, said The Daily Telegraph.

Should the idea be adopted, a motorist driving 10,000 miles a year for an employer could face an additional tax bill of £500 to £1,500 a year, the newspaper said.

At present, anyone who is reimbursed for using their own car is entitled to claim 40p a mile for the first 10,000 miles without facing tax. After that anything paid over 25p a mile is subject to both tax and national insurance.

Under a plan reportedly being considered, the 40p allowance would be slashed to 25p for those using cars with CO2 emissions above 185 grams per kilometre. Thus anybody driving 10,000 miles for work could be £1,500 a year worse off, the newspaper said.

The Telegraph said that Revenue and Customs had confirmed that the tax penalty would apply to those using their own cars for work.

A spokesman for Revenue and Customs said: "This is pure speculation and any policy decisions are a matter for ministers."