- Company car use down by 20% over past eight years
- Government should keep costs in check warns trade
- More drivers using their company cars for business use only
The number of people using company cars is down, new statistics on Benefit-in-Kind taxation have revealed.
A report by the Office of National Statistics showed that the number of taxable company cars has fallen from 970,000 in 2009/10 to 950,000 in 2010/11.
It’s part of a downward trend, with the number of company cars in use falling dropping by more than 20% over the past eight years from 1.2 million in 2004/05.
The BVRLA, a trade body representing business car drivers, claimed that this is because the current company car tax rules make the tax burden prohibitively expensive.
BVRLA Chief Executive John Lewis said: "What these BIK figures tell us is that the company car tax regime is beginning to tax some people out of private use. More people are deciding not to take a perk car or are only using company cars for business mileage. Others are paying a personal use contribution to their employer instead of paying BIK tax.
"These statistics show that the government has to walk a fine line when setting emissions-based company car tax. The current tax is clearly having some negative environmental side effects if it is resulting in people opting to use their own, older and more polluting cars in order to do their private mileage."
The figures also show that as many as 297,000 firms across the country folded between 2009 and 2010 - a sharp increase of 20,000 on the year before. That could be another contributing factor for the decline in the number of company cars.
Lewis added: "It is important to note here that we are not seeing a decline in the popularity of business cars. You only have to look at our own BVRLA member fleet sizes, the SMMT figures for fleet registrations or the government's own forecasts to see that the number of business cars has increased over the past three years and that they will continue to increase in the years ahead as the economy pulls out of this latest recession."
Although the BVLA still has reason to be positive about the future, the levels of company car use could be hit by a 1% increase on the taxable benefit on cars, which will add cost to employees with company cars emitting more than 75 grams of CO2 after April 1, 2014.
To find out how much you will pay in company car tax for your next car click here.