The number of employees paying company car tax has increased for the first time in 10 years, as newly-released figures from HMRC for 2014/15 demonstrates.

HMRC released data showing that 950,000 employees paid benefit-in-kind (BIK) tax on a company car in 2014/15 – a 1% rise on the 940,000 recorded in the previous financial year.

It is the first time the number of people paying BIK on company cars has increased since 2006/07, when the number was 1.16 million.

This provided the Treasury with £1.9 billion in BIK and employers national insurance payments which equates on average to £2,000 per car – this is an increase of almost 15% since 2011/12.

This trend of increasing tax take is in spite of cars continuing to have lower CO2 emissions and is set to continue as published CO2 tax rates are rising at 2% of the P11D value for every 5g/km CO2 emissions for 2017/18 and 2018/19 plus a 3% increase for 2019/20.

Therefore taking into account the 2% rise already implemented for this current tax year, employees will see an overall benefit in kind tax rise of circa 30% in monetary terms over the period 2016 to 2020.

We therefore strongly advise that employers inform their employees to take into account future tax impact when choosing their company car.

Fore more information, please contact us.