HMRC has reported 70,000 fewer people paying for the benefit of company car tax, another substantial fall this year.

The latest benefit-in-kind (BIK) statistics, published by HMRC on July 29 revealed 800,000 company car drivers in 2019/20, down from 870,000 the previous year.

New company car tax rates, including an initial zero percentage rate for pure electric vehicles (EVs), were introduced from April 2020, with many leasing companies suggesting this will increase the uptake in company cars, but this will not be reflected in HMRC’s figures until the next year’s data set is released.  

This year's provisional figures suggest the number of employees receiving the benefit has fallen by some 160,000 in the past five years, from 960,000 in 2015/16.

The amount of company car tax collected has stayed the same at £1.75 billion, despite the dramatic decline in employees paying BIK on a company car between 2018/19 and 2019/20.

National Insurance Contributions (NICs) have increased, however tax now stands at £750 million in 2019/20 compared to £730m in 2018/19.

In a similar situation to September 2020, when company car drivers dropped 30,000 year-on-year, the reduction in company cars seen over the past few years coincides with the introduction of voluntary payrolling.

HMRC says that part of the reduction is due to employers moving from submitting P11D returns to collecting tax on company cars through payroll.

In 2016/17, employers were not able or required to submit more detailed information about company cars when collecting tax on this benefit through voluntary payrolling.

HMRC promised to rectify the situation when, the following tax year, employers payrolling car benefit were able to provide more detailed data about the cars being provided.

Despite reporting becoming mandatory in 2018/19 HMRC says suggests that “significant numbers” were not reported in all three years.

Recently the number of reported company car users has fallen to 900,000 in 2017/2018 and then to 870,000 in 2018/2019.

Provisional figures show a further fall to 800,000 in 2019/20, with HMRC suggesting that there is likely to be a substantial number of individuals in these years who received company car benefit that (while taxed at payroll) was not properly reported.