The number of people paying company car tax has again decreased significantly, with HMRC reporting 70,000 fewer people paying for the service.
The latest in kind statistics (BIK), published today (July 29) by HMRC, shows that there were 800,000 company car drivers in 2019/20 – compared to 870,000 in the previous year.
From April 2020, new tax rates for company cars were introduced, including an initial zero percentage for all-electric vehicles (EV), with many leasing companies suggesting increased use of company cars.
However, a potential increase in company car drivers will not be reflected in the HMRC’s numbers until next year’s data set is released.
Instead, according to preliminary figures for this year, the number of beneficiaries has fallen by around 160,000 in the last five years, from 960,000 in 2015/16.
The new data also shows that the amount of company car tax levied has remained the same at £ 1.75 billion, despite the dramatic decrease in the number of employees paying BIK for a company car between 2018/19 and 2019/20.
However, Social Security Contributions (NICs) have increased, with the tax officer bringing in £ 750million in 2019/20, compared to £ 730million in 2018/19.
The decline in company cars in recent years coincides with the introduction of voluntary payroll accounting.
HMRC claims that at least part of the reduction is due to employers moving away from filing P11D returns to collect taxes on company cars through payroll.
In 2016/17, employers could not or did not have to provide any further information on company cars for the taxation of this service as part of the voluntary payroll.
In the following tax year, employers billing car benefits were able to provide more detailed data on the cars provided through their FPS (Full Payment Submission), which at the time HMRC announced Fleet News would correct the situation.
However, HMRC says that “significant numbers” were not reported in all three years, even after reporting became mandatory in 2018/19.
Between the tax years 2010 to 2016, the reported number of company car grant recipients remained relatively stable (just under one million).
Most recently, the number of registered company car users fell to 900,000 in 2017/2018 and to 870,000 in 2018/2019.
Preliminary figures show a further decline to 800,000 in 2019/20, with HMRC suggesting there will likely be a significant number of people receiving company car benefits that have not been properly reported (although taxed on payroll) in those years .
During the same period, the total taxable value of the registered company cars increased significantly.
In the 2010/11 fiscal year it was £ 3.66 billion but in 2019/20 it was £ 5.42 billion. This increase is primarily due to the increase in the average taxable value of a company car, which is itself due to the increase in average car list prices and the “reasonable percentages” used to calculate the typical value of a company car, according to HMRC.
Read the August issue of Fleet News, which will be published next month, for more analysis and insights into the latest company car statistics.
