HMRC data suggests dramatic decline in company car drivers

The number of people paying company car tax has again fallen substantially, with HMRC reporting 70,000 fewer people paying for the benefit.

The latest benefit-in-kind (BIK) statistics, published by HMRC today (July 29), show there were 800,000 company car drivers in 2019/20 – down from 870,000 the previous year. 

New company car tax rates, including an initial zero percentage rate for pure electric vehicles (EVs), were introduced from April 2020, with many leasing companies suggesting an increased uptake in company cars. 

However, any potential increase in company car drivers will not be reflected in HMRC’s figures until the next year’s data set is released.  

Instead, this year's provisional figures suggest the number of employees receiving the benefit has fallen by some 160,000 in the past five years, from 960,000 in 2015/16.

The new data also shows that the amount of company car tax collected has stayed the same at £1.75 billion, despite the dramatic decline in employees paying BIK on a company car between 2018/19 and 2019/20.

National Insurance Contributions (NICs) have increased, however, with the tax man collecting £750 million in 2019/20 compared to £730m in 2018/19.

The reduction in company cars seen over the past few years coincides with the introduction of voluntary payrolling.

HMRC claims that at least part of the reduction is due to employers moving from submitting P11D returns to collecting tax on company cars through payroll.

In 2016/17, employers were not able or required to submit more detailed information about company cars when collecting tax on this benefit through voluntary payrolling.

The following tax year employers payrolling car benefit were able to provide more detailed data about the cars being provided through their FPS (Full Payment Submission), which at the time HMRC told Fleet News would rectify the situation.

However, HMRC says suggests that “significant numbers” were not reported in all three years, even after reporting became mandatory in 2018/19.

Between tax years from 2010 to 2016 the reported number of recipients of company car benefit remained relatively stable (at just under one million).

More recently the number of reported company car users has fallen to 900,000 in 2017/2018 and then to 870,000 in 2018/2019.

Provisional figures show a further fall to 800,000 in 2019/20, with HMRC suggesting that there is likely to be a substantial number of individuals in these years who received company car benefit that (while taxed at payroll) was not properly reported.

Over the same period the total taxable value of reported company cars has increased significantly.

In tax year 2010/11 it was £3.66bn but by 2019/20 it had reached £5.42bn. This increase, says HMRC, is primarily due to increases in the average taxable value of a company car, which is itself a result of increases in average car list prices and increases to the ‘appropriate percentages’ used to calculate a company car’s typical value.

Read the August edition of Fleet News, published next month, for more analysis and insight on the latest company car statistics.