Company car take-up soared again in the 2024/25 tax year, driven by soaring demand for electric vehicles and salary sacrifice. Newly published Benefit-in-Kind statistics from HMRC show the
Company car take-up soared again in the 2024/25 tax year, driven by soaring demand for electric vehicles and salary sacrifice.
Newly published Benefit-in-Kind statistics from HMRC show the number of UK employees receiving a company car benefit surged to 920,000 over the period, representing a significant year-on-year increase of 80,000 drivers.
This resurgence in demand shows a sustained recovery since the metric hit a pandemic-era low of 720,000 and demonstrates the effectiveness of tax incentives for ultra-low emission vehicles.
The company car benefit figure had declined from 960,000 in 2015/2016 up until 720,000 in 2020/2021. Since 2020/2021 it has increased year on year. The drop in the number of company car drivers in 2020/2021 is expected to have been exacerbated to some degree by the pandemic, and associated reduction in economic activity. Changes in work practices during that period may have continued into 2023/2024.
However, comparisons over time are difficult due to incompleteness arising from the introduction of voluntary payrolling in April 2016. Until April 2018 there was no requirement to report the details of voluntarily payrolled company cars. Reporting of these cars is now required but it appears there is still underreporting, which may account for some of the reduction in company cars since the 2015/2016 tax year.
While company car numbers have increased, the total taxable value fell to £3.07bn in 2024/2025 from £3.27bn in 2023/2024, following a period of growth that peaked at over £5bn in 2019/2020.
Taxable value spiked because the Government raised the “appropriate percentages” while average car list prices also increased. These factors countered the shrinking number of company car drivers. However, the total taxable value dropped the following year as total company cars fell and drivers switched to electric models to benefit from lower tax rates. This electric vehicle trend remains strong through 2024/2025. For traditional petrol and diesel cars, tax percentages rose slightly, while their average retail prices saw only minor growth.
The 2024/25 data also reveals there were 40,000 individuals reporting company car benefit that were also reported to be in receipt of car fuel benefit, the same as in 2023/2024. This is about 4% of total car benefit recipients, down from 5%. This will have been affected by the pandemic travel restrictions in 2020, as well as the continuing increased share of fully electric company cars in 2024/2025.
The total taxable value of car fuel benefit has fallen from £200m in 2022/2023, to £140m in 2024/2025. Total income tax and NIC liabilities for car fuel benefit were around £50m and £20m respectively.
The data also reveals a long-term downward trend in both the number of recipients and the total taxable value of car fuel from 240,000 recipients (taxable value £770m) in tax year 2011/2012 to 40,000 recipients (taxable value £140m) in 2024/2025.
The average taxable values for car benefit and car fuel benefit in 2024/2025 were £3,330 and £3,510 respectively, down from £3,930 and £3,990 the year prior.
There has also been a medium-term downward trend in both average car and car fuel benefit claims from £6,770 and £5,240 respectively in 2019/20 to £3,330 and £3,510 respectively. This is likely the result of rising fuel prices during most of this period, causing employers and employees to look more carefully at whether the value of the benefit received is worth incurring the fuel benefit tax charge. Although average fuel costs were around 10% lower in 2020/2021, there were significant travel restrictions at various times due to the pandemic which may have driven some taxpayers to relinquish car fuel from their employer. The rise in electric vehicles means fewer company cars used fuel benefit in 2024/2025 compared to earlier years and is likely to be the primary factor behind any recent and future decreases.
The data also shows the changing face of CO2 emissions and fuel type among the UK’s company car parc.
Company cars emitting over 165g/km dropped dramatically from 58% in 2002/2003 to 13% in 2011/2012. By 2024/2025, that figure fell below 1%. This rapid decline stems from highly efficient fossil fuel engines and a soaring market share of pure electric vehicles.
In contrast, the number of reported recipients of company cars with CO2 emissions of 74g/km or less, was 693,000 in 2024/2025, up from around 534,000 in the previous tax year.
The number of recipients of cars with emissions of 115 g/km and above has decreased substantially. In 2011/2012 only 13% of company cars had emissions of less than 115 g/km. In 2024/2025 this was 82%.
Fully electric cars accounted for 51% or 467,000 of car benefit recipients in 2024/25.
One effect of the increase in electric company cars is that they have helped reduce the average CO2 emission rate of company cars to 41g/km in 2024/2025. Even after excluding electric cars from the average, the average CO2 emission rate has reduced to 79g/km confirming a trend towards lower emission in cars that use fossil fuel including ultra-low emission vehicles (ULEVS).
The number of ULEVS, with CO2 emissions no greater than 75g/km but not zero emission, have also increased steadily in recent years from 5,000 in tax year 2014/2015 to 226,000 in 2024/2025.
Conversely, the traditional reliance on diesel has effectively ended. Diesel cars accounted for around 80% of company cars up to 2017 with a steady decline to 23% by 2022/2023. The proportion of company cars using diesel fuel reduced to 7% (62,000) in 2024/2025.
Figures for tax year 2024/2025 are based on an early extract of electronically captured data on car benefits. Income Tax and NICs figures for that year are also based on projections of the Survey of Personal incomes (SPI) for tax year 2024/2025. HMRC noted that these figures are provisional and subject to revision in future publications.
