The company car stats are finally out for 2020/21, with a slight delay of 2 months later than last year’s release.
According to HMRC the number of company cars continue to decline, there being only 720k company cars for 2020/21 (6 April 2020 to 5 April 2021), this is 10% less in comparison to the previous year (800k). In total the combined tax and NIC for company cars is at £2.1bn.
Since 2009/10, there has been a steady increase in the total tax take which started to then level out for 2019/20. However, this year it is dropped (by a huge £0.4bn) compared to last year. This could in part be due to the lower volume of company cars, but it is also likely an impact from people switching to Plug In Hybrid Electric cars and also Fully Electric cars, where the tax rates are much lower. The number of reported company cars with CO2 emissions of 75g/km or less was 78k more than last year, up to 137k for 2020/21. Additionally, fully electric cars accounted for 7% of car benefit recipients, where their scale charge is at a minimal of 2%.
With the scale charges frozen until 2024/25, it is unlikely the income from company car tax will increase any time soon. This may mean that in April 2025, HMRC will need to increase the tax charge on electric and hybrid cars in order to increase the income, but how much by? Would a small increase of 5% do, or will they be more drastic with a 10% or 15% increase? We’ll just have to wait to find out!