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Company cars on the increase reveal new HMRC statistics

Company cars on the increase reveal new HMRC statistics

The number of company cars on the UK’s roads increased in 2015-16, according to the latest provisional figures on benefit-in-kind tax issued by HM Revenue and Customs (HMRC).  

The statistics, which confirm figures for 2014-15 and reveal provisional data for 2015-16, and are published annually, reveal there were 960,000 company cars on the roads, up from 950,000 in 2014-15 when the figure increased from 940,000 in the previous year.  

In terms of numbers of recipients of taxable benefits-in-kind, around 3.69 million individuals in 2014-15, 26% received a company car and 5% car fuel benefit, but private medical and dental insurance was the most widely received benefit by 64% of all those receiving any benefit.  

Cars, car fuel and private medical/dental insurance remain the highest value benefits-in-kind. Car benefit (£3.95 billion rising to an estimated £4.32 billion in 2015-16) and car fuel benefit (£720 million reducing to an estimated £700 million in 2014-15) together represented 61% of the total taxable value of all benefits in kind, considerably higher than the proportion of recipients who received these benefits. That, said HMRC, was due to the higher average taxable value for those benefits. Private medical and dental benefit accounted for 24% of all benefits by value. 

Company car drivers contributed £1.37 billion in benefit-in-kind tax in 2014-15, a figure predicted to rise to £1.48 billion as a result largely of tax rises introduced in 2015-16. The amount of tax collected from employees receiving fuel paid for by their employer for private use reduced to £250 million in 2014-15, with a reduction to £240 million estimated for 2015-16.  

The amount of Class 1A National Insurance paid by employers on the company car benefit increased to £550 million in 2014-15, up from £530 million in 2013-14, with a further rise to £600 million estimated for 2015-16.  

The figures reveal that 96% of company cars in 2014-15 emitted less than 165 g/km of CO2, an increase from 94% in 2013-14. HMRC attributed the further rise to the established strong reducing trend in the level of emissions. In 2002-03 58% of company cars had emission values in excess of 165 g/km; in 2014-15 that had reduced to just 4%.  

Company cars emitting under 145 g/km increased by 8% compared to 2013-14 and those emitting over 145 g/km decreased by 29%. The emission-dependent scale of appropriate percentages for company cars was one of many factors incentivising the manufacture and purchase of low emission vehicles, said HMRC. 

Currently, about 82% of company cars use diesel fuel with about 18% using other fuel types, predominantly petrol. In 2002-03 only 33% of company cars were diesel.  

The data does not include company cars powered entirely by electricity, for which there was zero taxable benefit in years up to and including 2014-15. In that year, HMRC estimates that 1,700 employees were provided with an electric company car; provisional data indicated an increase to 2,200 employees in 2015-16.  

The number of employees paying benefit-in-kind tax on the private use of company fuel has dropped to its lowest recorded level - 190,000 people in 2014-15 (2013-14: 200,000) - and the figure is estimated to fall to 180,000 people when 2015-16 official data is published.  

HMRC said the reduction for car fuel benefit was likely to reflect rising fuel prices during most of the period under review, causing employers and employees to look more carefully at whether the fuel benefit formula resulted in a tax charge commensurate with the true value of the benefit.  

Meanwhile, the number of recipients of taxable excess mileage allowance payments held steady until 2009-10, with a slight fall in 2010-11 from 550,000 to 510,000 and then a much larger fall (to 380,000) in 2011-12. From April 2011 the Approved Mileage Allowance Payments (AMAPs) rate was increased from 40p to 45p for the first 10,000 miles of business travel in a tax year. That meant that drivers receiving mileage allowances in excess of AMAPs were charged tax and National Insurance on the difference between the payment offered by their employer and 45p, rather than 40p. Since 2011-12, there have been steady further decreases with only 250,000 taxpayers who received the benefit in 2014-15, with the figure likely to fall to 210,000 in 2015-16.  

The reduction, said HMRC, was caused by a number of employers, in particular local authorities, who reduced mileage allowances paid to employees. Tax paid on mileage allowances has reduced to £20 million.