In 2010 the average company car emitted 147g/km of CO2, had a scale charge (the List Price x SC%) of £3,865 and the average company car driver had a marginal tax rate of 31.9%.
By 2020 the CO2 emissions had fallen by 24% to 111g/km of CO2 and, despite this, the average scale charge risen to £6,793. The marginal rate of tax paid by the average company car driver was 32.2% in 2020.
It’s also interesting to note that the marginal tax rate average rose through 2010 to 2015 before falling back sharply (see the blue line on the right hand graph), which we suspect may have been caused by salary sacrifice before HMG announced rule changes to kill that (for normal diesel and petrol cars).
All of this is based on a more detailed analysis of data updated by HMRC just two weeks ago based upon P11D submission to April 2020.
What does it tell us?
It tells us that the amount of tax company car drivers rose by 76% DESPITE the related CO2 emissions falling by 24%.
It also suggests through the last 5 years more basic rate taxpayers stuck with the benefit of a company car than higher rate tax payers who opted out, presumably to drive whatever they wanted. We’d speculate many of those lower earners had no choice but to pay much higher tax on their company cars. And let’s not forget, the electric cars these employees were supposed to take instead, were NOT available in anything like decent numbers and prices until really this year.
The good news is that electric cars are coming on strong now and hopefully there will be options to cut taxes for those who need a company car for their work.