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Lower income tax for drivers

People who use their car for work can apply a larger income deduction this year, funded by a tax on fuel firms

PEOPLE will be able to make a higher deduction for commuting on their income tax forms this year, to combat fuel price rises.

The French petrol industry will fund the cost of allowing taxpayers to offset a higher amount of their fuel bill against their income tax.

The amount you are able to deduct from your income per kilometre for use of a personal car to commute or for work purposes has been raised by 4.6% for 2010 income tax declared next month. This is instead of the 1.6% that had been planned initially.

The measure, for those who use the frais réels system for paying income tax, is meant to help people cope with steep rises in fuel prices from about €1.35 in March last year to €1.51 in March this year.

It will benefit about five million people, both employees and professionals and people with small businesses (as opposed to larger firms paying corporation tax and not income tax).

It does not however benefit the many people who opt to have a standard 10% taken off their income for expenses, as opposed to going for frais réels, which involves keeping receipts and claiming a specific “real” work-related expenses sum.

Sixty per cent of the cost to the government of the more generous rate is going to be footed by petrol producers and refiners, notably Total. The rest is being funded by distributors.

To work out your deduction allowance for this year’s declaration, which is meant to cover not just petrol, but also depreciation and repairs etc, the following site lists the latest figures: Car expenses calculations
Pick the car power in the left-hand column and then apply the calculations in the columns to the right of it, ie. distance in kilometres x (figure). Notice the entitlement changes after 5,000km and beyond 20,000km.

Photo: Richard Villalon - Fotolia.com

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