Let's be fair to the Chancellor

I have just been looking through the budget press releases again and am reminded about the "simplification" in the capital allowances rules which will produce greater "fairness" to business owners of company cars.

Under the old rules, you had to list every car which cost over £12,000. But at least you would get full tax relief for the cost of the car once you had sold it.

Under the new rules, it is much simpler. All cars go into a single pot rather than being listed separately.

The problem is, you never get your tax relief. I looked some figures up - a £15,000 Mondeo bought four years ago was worth about £3,500 in November. So if you had sold it your real loss over the four years would have been £11,500. Under the new rules, the most tax relief you would receive is £8,850 over the same period. And of course a Mondeo does not necessarily have a low CO2 emission, so the tax relief could be even less - actually a lot less - just £5,160.

Is this fair? Alistair Darling tells us it is, so it must be true.

Can you avoid these tax consequences? Yes, but only by insisting employees buy and fund their own cars, or perhaps by closing your company down every few years (since you would then get the rest of the allowances).