HMRC has released company car statistics based on electronically captured car benefit data from the 2022/2023 tax year.
The report shows an increase of 40,000 company car recipients from the previous year and reverses a steadily decreasing figure from the 2015/2016 tax year of 960,000.
During the tax year 2022 to 2023, 760,000 people were reported as receiving a company car benefit with the overall taxable value of this benefit amounting to £3.60 billion.
The total taxable value of reported company cars fell to £4.62bn in 2020/21 and £3.95bn in 2021/22.
HMRC commented that:
“The drop in the number of company car drivers in 2020 to 2021 is expected to have been exacerbated somewhat by the impacts of the COVID-19 pandemic, and associated reduction in economic activity.
Changes in work practices during that period may have continued into 2021 to 2022. The increase in company car drivers in 2022 to 2023 may indicate a slight return to more normal activity.”
Electric company cars reducing car tax
The transition to electric vehicles persisted into 2022/23, with 222,000 company cars now fully electric which totalled 29% of the total company car fleet.
The count of individuals receiving company cars emitting 75g/km of CO2 or less increased to 369,000, compared to approximately 243,000 in the previous financial year.
This figure includes fully electric vehicles, which grew from 50,000 in 2020/21 to 125,000 in 2021/22, and reached 222,000 by 2022/23 – constituting 29% of the company car fleet.
Electric company cars are heavily subsidised with their benefit in kind (BIK) value substantially lower than petrol or diesel engines.
The BIK rate for electric company cars rose from 1% to 2% on 6th April 2022 and will remain at 2% until April 2025. Starting in April 2025, the electric car BIK rate is expected go up by 1% each tax year until April 2028.
The modest BIK rate of 2% offers drivers substantial financial support, enabling employees to achieve significant tax savings when they opt for an electric vehicle via their employer’s salary sacrifice scheme.
In comparison if you choose a non electric company car you could be subject to a company car tax charge of up to 37% due to their higher pollution levels.
The growth in the use of electric company vehicles also means less company cars used car fuel meaning a substantial reduction in the number of employees receiving a company car fuel benefit.
How to check your company car benefit
Most company car users get a P11D form from their payroll department after the end of each tax year on 5 April 2024.
Company car tax is collected by an adjustment to your tax code which should include the value of your benefit in kind.
The P11D will show you the value of your company car BIK for the previous tax year. It’s worth checking that your tax code reflects the correct benefit in kind and make sure that if your company car BIK value changes that your tax code is altered accordingly.
