The number of company car drivers is on the rise. And the rise is driven by one thing: electricity.

Perhaps I should qualify that slightly: the rise is due to the very low company car tax payable on electric company cars.

But there’s little doubt about it: once more the company car has become a highly valuable employee benefit.

It’s all there in the latest data from HMRC, which outlines significant growth in the company car fleet with the number of reported recipients of company car benefit in the 2024-25 tax year being 920,000, a rise of 80,000 from the previous year.

It’s highly gratifying to see such traction in the fleet market, and a growth path we have been witnessing since pre-pandemic. Last year for example, which covers part of the HMRC data, we saw electric cars (EVs) and ultra low emission Plug-in Hybrid Vehicles (PHEVs) accounting for 84% of all new vehicle orders. Our own fleet of company cars was all-electric by mid-2021.

And the trend hasn’t stopped. So far this year our order banks are showing an 85% market share for both model types, so we can expect more of the same from HMRC next year.

What’s driving the change in company cars?

Tax, quite simply.

Changes introduced to the benefit in kind on company cars is modifying choice. During the 2024-2025 financial year, the BIK on an EV was just 2%. This has risen in 1% incremental steps to 4% in the current financial year, whereas the tax on what was once considered a low emission car (sub-100g/km emission) is now at 25%.

The effect on cleaning the environment is significant. In the financial year under consideration by the HMRC data, just 1% of company cars had CO2 emissions that were in excess of 165g/km. Contrast this to the 2002/03 tax year when 58% of company cars had tailpipe emissions beyond the 165g/km mark.

While the tax treatment of company cars is fundamental to their growth, what has also helped is the increasingly wide variety of electric cars now available on the market.

Whereas once it was all high-end executive cars, today the choice is phenomenal, from the cheapest car on the market, the Dacia Spring – see our story The cheapest new car in Britain is now electric – and that changes the conversation – to some of the tech-driven newcomers from China, such as BYD and Chery, while not forgetting the innovative and well-priced European cars from the likes of Renault and Volkswagen.

Salary sacrifice is also a crucial factor

Another area that is helping drive company car growth is salary sacrifice. Employees give up part of their gross salary in return for an electric car, which thanks to tax breaks makes it a highly advantageous way to acquire a new car.

Employees who take a car this way also pay company car tax, so the growth of salary sacrifice has certainly helped those HMRC figures. In the most recent BVRLA Industry Outlook prepared for 2026, 70% of leasing companies said they expect growth in salary sacrifice, particularly among larger firms.

It’s something we continue to see: strong take up of our award-winning salary sacrifice scheme as part of that 85% order bank of EVs and PHEVs I’ve already mentioned.

Don’t forget the ESG agenda

The Government has kept benefit in kind low on electric company cars as part of its net zero ambitions.

Companies themselves have responded with environmental, Social and Governance agendas that highlight the importance of decarbonisation, as indeed we have at Fleet Alliance as a certified carbon neutral business.

Salary sacrifice is an important consideration in this ESG process, with companies as diverse as Scottish civil engineering firm Foundation Solutions HV and West Midlands-based mortgage company Brain Consultants both engaging recently with us on installing salary sacrifice schemes for their employees.

One final thought: HMRC admits that the data is incomplete over time due to the introduction of voluntary payrolling. We’ve always thought that there has been under-reporting in the past, partly because of our own sales data which hasn’t tallied with HMRC’s.

But what I don’t think can be argued is the general direction. After a dip in the data from 2018-2021, the numbers of company car takers have been trending upwards consistently year on year.

Which shows what a valuable employment benefit the company car remains.