Fleet News

HMRC BIK statistics suggest dramatic company car decline

Row of parked cars

The number of company car drivers appears to have fallen by 50,000 year-on-year, according to new benefit-in-kind statistics published by HMRC.

However, tax officials say that initial analysis suggests a new way of reporting company car tax may have skewed the figures.

Since 2009-10, the number of company car users had remained relatively stable (at just under 1 million). But, new provisional figures for 2017/18 indicate a dramatic fall from 940,000 in 2016/17 to 890,000 the following financial year – a 5.3% decline.

HMRC says that the figures do not include any estimate of the impact of voluntary payrolling, which could account for a “significant proportion” of the decline in reported numbers.

Voluntary payrolling was introduced in 2016 to ease the reporting burden of benefit in kind (BIK), with employers moving away from submitting P11D returns to collecting tax on company cars through payroll.

However, employers were not able or required to submit more detailed information about company cars when using the new regime.

This changed from 2017-18, when employers payrolling car benefit were able to provide more detailed data about the cars being provided through their FPS (Full Payment Submission). But, HMRC says that providing this data was not mandatory until 2018-19.

As such, detailed information about the recipients of company cars through voluntary payrolling was not provided by many employers during the period covered by these statistics. The expectation is that next year’s BIK statistics will include any company car recipients that could have been previously hidden.

It will only be then that the fleet and leasing industry will be able to get an accurate understanding of the number of company car drivers choosing cash instead of a car.

A Fleet News poll last autumn suggested that three-quarters (74.8%) of respondents were seeing an increasing number of employees choosing cash rather than a company car.

Prior to these latest figures being published, the UK’s largest car leasing company, Lex Autolease, had suggested the number of company car taxpayers could fall even further to 832,000 by April 2020 as a result of optional remuneration arrangement (OpRA) tax changes and WLTP.

It believes that the changes to company car taxation under OpRA have led to additional complexities and costs for customers and drivers and the introduction of the new emissions testing regime, WLTP, last year, led to a number of issues for fleet operators.

Furthermore, company car drivers are still waiting to hear how the Government may account for increases in CO2 values thanks to WLTP, when the measure is used for tax purposes from April 2020, and BIK tables beyond 2020/21.

See the August edition of Fleet News for further analysis of the HMRC data.

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  • Sage & Onion - 27/06/2019 13:39

    In my opinion, this is HMRC trying to mask the effect of them not releasing future BIK rates by burying their head in the sand and denying any responsibility. The true number of company cars sold into the marketplace should surely be known by the manufacturers and leasing companies so why don't HMRC find out the true figures because if they are going to base their future BIK rate scale on assumptions like this to balance their CCT revenue then that isn't going to help businesses or drivers at all.

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    • rosco7 - 28/06/2019 16:30

      Yes, the HMRC are using reported Company Car tax data, which you could theoretically as a self assessment person wait until well after the tax year end to report. Everyone else uses sale data. The issue here isn't the HMRC, its the Treasury who are sitting on idiotic company car tax bands and whose inaction is crashing the industry in the UK.

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  • rosco7 - 27/06/2019 17:47

    The treasury are yet again in denial. If they think there are 50,000 payrolling company cars, they are wrong, payrolling is only common on very high earners, who mostly don't have company cars anyway, the change in rules is an effect, but not much on cars. It is clear the majority are people with a cash allowance option choosing to avoid the company car tax punishment. By the time the treasury get around to reviewing the company car tax bands, the number of company cars will drop by a further 150,000 I estimate, and they are still 14 months behind in the figures, As of today, the total number of company cars could be 600k or less. And ironically the majority of drivers with a car allowance option will be 40% tax payers, so the effect on the treasury income will be significant. The damage is done, the majority of cash takers will never return to a company car. Why would they when they can get a higher performance, higher specification car, and still have change.

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  • Ashley Barnett - 01/07/2019 15:51

    In my presentation at BVRLA conference in November I predicted a decline in numbers - I didn't predict it to be as big as this. Some of it could be due to payroll reporting but I'm not 100% convinced. Of much bigger concern to me is the environmental impact this decline is having in the UK - we have over 34m cars on the roads and with the number of new registrations declining and the number of company car drivers declining - this can only mean an older, more polluting 2nd hand fleet - the complete opposite of what we need to achieve a net zero future by 2050. To solve this problem we need a joined up approach across all government departments, industry & OEMs to plot the path for the future #buildtheroadtozero

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