Company car tax payments continue to fall as businesses start to switch to electric

Martin Lewis gives money-saving advice on VED car tax

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The new data from HMRC, found that only 800,000 people were paying for the benefit in 2019/2020. This is down from 870,000 company car drivers in the previous year.

New company car tax rates were introduced in April 2020.

This included an initial zero percentage rate for pure electric vehicles.

Because of this, many leasing companies suggested there would be an increased uptake in company cars.

The research also shows the amount of company car tax collected has stayed the same at £1.75 billion.

This is despite the dramatic decline in employees paying benefit-in-kind (BIK) tax on a company car as a result of the pandemic.

The Government website states: “You’ll pay tax if you or your family use a company car privately, including for commuting.

“You pay tax on the value to you of the company car, which depends on things like how much it would cost to buy and the type of fuel it uses.

“This value of the car is reduced if: you have it part-time, you pay something towards its cost, or it has low CO2 emissions.


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“If your employer pays for fuel you use for personal journeys, you’ll pay tax on this separately.”

Company car tax benefits differ slightly for hybrid vehicles.

If a company car has emissions of less than 50 grams of carbon per kilometre, the value of the car is based on its zero-emission mileage figure, or “electric range”.

This is the distance the car can go on electric power before its batteries need recharging.

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