Published Wednesday 11th November 2020

HMRC have just released provisional data on company car numbers, benefit in kind tax and employer’s national insurance contributions for the tax year 2018-19

The data reveals that the trend of employees moving away from a company car benefit to predominately a cash alternative continues with 2018-19 being the fourth consecutive year of decline.
The company car numbers in the UK up to March 2019 is recorded at 870,000 down almost 10% since 2015-16 tax year, with a 3.3% reduction in the last year alone.

However, the trend of increasing revenue for HMRC in the form of employees’ benefit in kind taxation and employers’ national insurance contributions is also continuing despite the ongoing reduction in overall company cars being taken.

Benefit in Kind tax and national insurance contributions on company cars rose to £2.46BN for 2018-19 which is a 7.4% increase over the previous year. When you factor in the reduced number of
cars being taxed the actual average tax revenue per company car has increased by 11.2%.

Furthermore, over the last 4 years leading up to 2018-19, the increase has been 41.4% so it is hardly surprising that employees are ditching company cars in such numbers due to these tax hikes.

Bearing in mind the above figures are before the introduction of full WLTP CO2 measurement that was fully implemented April 2020 (resulting in higher CO2 calculations) then it is difficult to see anything but these trends increasing.

Perhaps the light at the end of the tunnel is switching to ULEV (Ultra Low Emission Vehicle) at sub 50g/km of CO2 with much lower benefit in kind tax levels, or ideally moving to fully electric with zero emissions and no benefit in kind at all for the current tax year.

The move to electrification is undoubtably the way forward but the road ahead is full of challenges of cost, supply and infra structure and the ERA Fleet Team is pleased to offer our assistance in navigating this complex and costly area.

HMRC publications/benefits-in-kind-statistics-september-2020/statistical-commentary-september-2020

About the Author: Sean Bingham, has successfully implemented fleet efficiency solutions into more than 100 organisations including large multinationals and Pan European operations. ERA Fleet Cost Management specialise in providing advice and strategies on all aspects of fleet operation to obtain optimum efficiency.