Treasury receipts from company cars down by over £500m due to lower sales and greener fleets
Mon 20 August 2012
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Figures released by HM Revenue and Customs (HMRC) show that the Treasury's receipts from company cars have fallen by over £500m since 2005 due to a combination of lower sales and the adoption of more low carbon vehciles which enjoy lower taxes.
Fleet News reports that in 2004/05, HMRC collected £1.42bn in company car tax and £380 million in tax for free fuel, while National Insurance Contributions (NICs) for both totalled £700m. However, tax revenues for free fuel and benefit-in-kind (BIK) on company cars will have fallen by more than 20% – £390m – to £1.41bn in 2010/11. Tax receipts from NICs will have also declined by £140m to £560m over the same period, adding up to a total tax shortfall of £530m.
The data also shows that there has been a 21% reduction in the number of company cars since 2004/05.
Fleet News reports that documents obtained by the British Vehicle Rental and Leasing Association (BVRLA) under the Freedom of Information Act show that the Government hopes to earn an extra £2bn from company car tax between 2013 and 2017.
It also intends to make nearly one million fewer cars eligible for 100% first year or standard tax relief during the same period.
The Treasury has already announced that company car rates from 2014 to 2016 will see the appropriate percentage of list price subject to tax increase by one point for cars emitting more than 75g/km of CO2, to a maximum of 35% in 2014/15, and by two percentage points to a maximum of 37% in both 2015-16.
The capital allowance/lease rental restriction thresholds are also lowered in April 2013 from 160g/km to 130g/km.
Also, from April 2015, the five-year exemption for zero carbon and ultra-low carbon emission vehicles will come to an end.
The appropriate percentage for zero emission and low carbon vehicles will be 13% from April 2015 and 15% from April 2016.
The BVRLA recently made public its opposition to the direction of tax policy in relation to fleets. (Related story here.)
The LowCVP has also recently written to the Treasury expressing concern about the decision to end the exemption for zero emission vehicles from company car tax. (See related news here.)
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