Company car usage increases

Company car usage increases

Posted by

Martin Brown

August 2016


It is summer (finally), Team GB has done brilliantly at the Olympics and even better, it looks like the fleet sector has managed a medal of its own.

Post all the Brexit uncertainty, I was genuinely interested to read new data from HM Revenue and customs (HMRC) showing that the number of employees paying company car tax has increased for the first time in 10 years.

According to these latest HMRC figures, 950,000 employees paid benefit-in-kind (BIK) tax on a company car in 2014/15. This is a 1% rise on the previous year’s figure of 940,000.

Now, don’t get me wrong, I’m not pleased that people are paying more tax per se, but that more people are paying tax in return for having a company car.

This is the first time the number of people paying BIK on company cars has increased since 2006/2007, when the total was 1.16 million. So it’s pleasing to see growth in the sector.

However, the trade body for the vehicle rental and leasing sector, BVRLA, takes a more cautious view about this increase, believing these figures are masking a more deep-rooted problem.

BVRLA Chief Executive, Gerry Keaney, is on the record as saying: “Although the rise is welcome, it is disappointing that we only had growth of 1% during a period that saw a 500,000 increase in the UK workforce.”

Keaney believes that despite company cars being the newest, cleanest and safest on UK roads, they are hindered by an ever-increasing tax burden.

Now I can’t disagree with Keaney about company car tax – that goes hand in hand with a company car. And some of that rising burden is due to the increased P11D cost of cars. But it also needs some perspective: consider the fabulous choice of vehicles that are now available. For example, who would have thought a crossover, like the Nissan Qashqai, would become a mainstream alternative to a traditional five-door hatchback on company car choice lists?

And with the extensive vehicles available today, drivers can do much to minimise the amount of company tax they pay by choosing low and ultra low emission vehicles, and reaping some of the benefits: such as the lowest benefit in kind banding rate of company car tax (7%), no fuel benefit charge and 100% first year capital allowances if you buy.

If you’re looking for help to choose the lowest emission vehicle you can, we’ve taken away much of the effort for you. Go to our eco-Fleet section and we’ll help you understand all the different green car choices: hybrid; plug-in hybrid; full electric vehicle; even hydrogen fuel cell. At the same time, we’ll also make you aware of any changes to legislation and taxation that may affect your choice of fleet vehicle.

I believe, we should be focusing even more on the positive benefits of the company car, rather than any perceived drawbacks. After all, how else can you get to drive the newest models every three- or four-years fitted with all the latest safety and tech kit. And what’s more, your company pays – your benefit in kind company car tax is a fraction of this cost.

So here’s to the company car – let’s look forward to another increase in numbers next year!

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