It’s that time of year again folks; the HMRC company car stats are out for 2019/20.
HMRC estimate there were 800,000 company cars reported in 2019/20, down 70,000 from the previous year, bringing in £2.5bn in combined tax and NIC for the Exchequer. These numbers are nearly 18 months out of date and still “provisional”.
After years of predictions from us, it appears to have happened; the total tax take was almost flat despite huge increases in the underlying tax rate. The fall in the number of people in company cars in 2019/20 offsetting the increased tax charged on each car. We’ve been boring people for several years about the Laffer curve, and here it is in action.
We know that employees are now switching to electric company cars in droves because the tax rate is so low. How many are switching out of diesel company cars versus coming back from cash allowances remains to be seen. We’d guess that the total number of company cars will now start to rise again.
For the total tax take on company cars in the UK we think this was the limit. £2.5bn is the max. Next year it will be lower and with lower BiK rates the tax is only going to decrease in the short to medium term.