ACFO says the 3% surcharge should be abolished because new diesel models are now much cleaner, and forthcoming Euro6 emissions standards could add several hundred pounds to the price of diesel cars to ensure compliance.

ACFO chairman Julie Jenner said: ‘There are no valid reasons for today’s diesel models to carry a 3% company car Benefit-in-Kind supplement. It was introduced almost a decade ago for reasons that no longer exist.

‘The tax system must reflect today’s vehicle technology and be fair and neutral irrespective of powertrain type. If the Government retains the 3% tax burden then it could see an increasing number of company car drivers opting for petrol-engined models with their improving MPG and lower list prices.

‘Personal budgets are being squeezed, and evidence suggests that average company car mileage is reducing. If drivers can save money by selecting a petrol-engined model in comparison with a diesel car they will make that choice. Ultimately, the Government’s decision to retain the 3% supplement may prove to be counter-productive and the tax-take will reduce.’

The request came during a recent face-to-face meeting with officials from HM Treasury and HM Revenue and Customs (HMRC) and was accompanied with a renewed call for five years advance notice of future company car benefit-in-kind tax rates.