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HMRC figures show drop in number of company car drivers

Date: 09 August 2012   |   Author:

New figures from HM Revenue & Customs show a drop in the number of drivers paying benefit-in-kind tax on company cars.

The figures released last week for the tax year 2009-10 show 970,000 people paid BIK on a car, down 40,000 on the previous year, with HMRC predicting a further 20,000 fall for 2010-11 when those figures are revealed next June.

The numbers compare with 1.2 million people in 2004-05, and have consistently fallen each year since the 1.16 million of 2006-07, although the rate of decline has slowed. Since

2004-05, the company car tax take from the Government has dropped by £270 million to £1.15bn.

The picture is more dramatic for those people claiming fuel benefit, with Government taxation changes discouraging the offering of private fuel as a benefit.

The number of people paying tax on free fuel dropped from 410,000 in 2004-05 to 270,000 in 2009-10, with another 30,000 predicted to come off that in the 2010-11 figures.

"This is the evidence that whatever people are saying about growing numbers of company cars, that is not the case," said tax expert Alastair Kendrick.

"At some point we'll hit the figure where it will slow down. We don't want to see essential users coming out of company cars because of the duty of care issues, but it's still in decline."

Kendrick also predicts that the Government changes to BIK levels, designed to restore some of the lost Treasury revenue, could lead to firms reviewing their policies in the wake of increasing BIK payments for their employees.

Bands will rise by 1% per year until the 2% increase announced for April 2015, which Kendrick believes will decrease the appeal of company cars for perk users.

The average monthly BIK payment for company car drivers in 2009-10 was £1180 per year, or £98 per month, and 50% of all Government BIK revenue comes from company cars, with 21% from private medical and dental care and 11% from car fuel benefit.

Number of drivers paying benefit-in-kind on company cars

Year Number of drivers Tax liability

2004-05 1.20m £1.42bn

2005-06 1.14m £1.38bn

2006-07 1.16m £1.34bn

2007-08 1.07m £1.30bn

2008-09 1.01m £1.22bn

2009-10 0.97m £1.15bn

2010-11* 0.95m £1.16bn

* = predicted

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