The Treasury’s tax take from company cars has fallen by more than half a billion pounds, according to figures released by HM Revenue and Customs (HMRC).
In 2004/05, HMRC collected £1.42bn in company car tax and £380 million in tax for free fuel, while National Insurance Contributions (NICs) for both totalled £700m.
However, tax revenues for free fuel and benefit-in-kind (BIK) on company cars will have fallen by more than 20% – £390m – to £1.41bn in 2010/11.
Tax receipts from NICs will have also declined by £140m to £560m over the same period, adding up to a total tax shortfall of £530m.
The data also reveals a downward trend in the number of company cars, with a fall of 21% to 950,000 vehicles in 2010/11 from 1.2 million cars in 2004/05.
The concern for fleets now is how the Government intends to plug this widening gap in revenues it receives from taxing employers and employees operating company cars.
Documents obtained by the BVRLA under the Freedom of Information Act show that the Government hopes to earn an extra £2bn from company car tax between 2013 and 2017.
It also intends to make nearly one million fewer cars eligible for 100% first year or standard tax relief during the same period.
The Treasury has already announced that company car rates from 2014 to 2016 will see the appropriate percentage of list price subject to tax increase by one point for cars emitting more than 75g/km of CO2, to a maximum of 35% in 2014/15, and by two percentage points to a maximum of 37% in both 2015-16.
The capital allowance/lease rental restriction thresholds are also lowered in April 2013 from 160g/km to 130g/km.
And from April 2015, the five-year exemption for zero carbon and ultra-low carbon emission vehicles will come to an end.
The appropriate percentage for zero emission and low carbon vehicles will be 13% from April 2015 and 15% from April 2016.
ACFO chairman Julie Jenner is worried that further action will be taken. “HM Revenue needs revenue and the concern ACFO has on behalf of its members is where this shortfall is going to come from,” she said.
Cars have become more fuel efficient and less polluting, driving down CO2 emissions and resulting in employees paying less in BIK.
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