The number of employees paying company car tax rose to 840,000 in 2023/24 – up 80,000 (10.5%) from the previous year, according to HMRC’s latest benefit-in-kind (BIK) data. This builds on a 5.5% increase recorded in 2022/23.
Despite this growth, the total taxable value of company car benefit fell to £3.27bn, down from £3.6bn in 2022/23. The figure had peaked at £5.43bn in 2019/20 before declining, largely due to a shift towards electric vehicles (EVs), which attract much lower BIK rates.
From 2011/12 to 2019/20, the rise in taxable value was mainly driven by increased ‘appropriate percentages’ and higher average list prices. Since then, however, EV uptake and fewer petrol/diesel cars have reduced the tax yield.
The growth in company car uptake is being fuelled in part by the popularity of salary sacrifice schemes. Fleet News' FN50 data shows salary sacrifice now accounts for 6.2% of cars on the risk fleet, totalling nearly 83,000 vehicles.
HMRC also noted that true company car numbers may be underreported due to voluntary payrolling, introduced in 2016. Meanwhile, the number of employees taxed on fuel benefit has dropped to just 40,000.
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