New figures released by HM Revenue & Customs (HMRC) have revealed the earnings and regional distribution of employees receiving company car benefits, showing that thousands of drivers paying company car tax earn below £50,000 per year.
According to the latest HMRC data, 920,000 employees paid benefit-in-kind (BIK) tax on a company car during the 2024/25 tax year, with around 28% earning less than £50,000 annually.
The figures highlight that company cars are no longer limited exclusively to higher earners, with 260,000 employees earning below £50,000 receiving the benefit. This includes:
- 130,000 employees earning between £40,000 and £49,999
- 80,000 employees earning between £30,000 and £39,999
- 50,000 employees earning below £30,000
However, higher-income employees still represent the majority of company car users, with 650,000 drivers earning more than £50,000 per year receiving a company vehicle.
The changing tax landscape has also contributed to significant growth in salary sacrifice vehicle schemes, particularly as more employees look for affordable ways to access electric vehicles through workplace benefits. Salary sacrifice has become an increasingly important part of the UK leasing market, helping drive demand for EVs while allowing businesses to support employee mobility and sustainability goals.
Read more: Salary Sacrifice Explosion Pushes UK Leasing Fleet To New Highs
The largest group falls within the £50,000 to £74,999 salary bracket, accounting for 320,000 company car drivers.
Company Car Tax Value Exceeds £3 Billion
HMRC data shows that the total taxable value of company car benefits reached £3.07 billion during the 2024/25 tax year.
The taxable value of a company car is calculated using several factors, including the vehicle’s list price, CO₂ emissions and fuel type. With company car taxation becoming increasingly linked to vehicle emissions, businesses are carefully reviewing which vehicles offer the best balance between tax efficiency, practicality and running costs. Plug-in hybrid vehicles have traditionally provided a middle ground between petrol and fully electric vehicles, but changes to benefit-in-kind (BIK) rates mean their position within company fleets is coming under increasing scrutiny.
Read more: PHEVs and BIK in 2026/27: The “Middle Ground” That’s Getting Squeezed
Employees earning between £50,000 and £74,999 accounted for more than £1 billion of the total taxable value, with this group contributing approximately £1.08 billion.
Across all company car drivers, the average taxable benefit was around £3,330 per employee.
| Income Range | Company Car Recipients | Taxable Value |
|---|---|---|
| £0 – £49,999 | 260,000 | £760 million |
| £50,000 – £74,999 | 320,000 | £1.08 billion |
| £75,000 – £99,999 | 140,000 | £480 million |
| £100,000 – £149,999 | 110,000 | £360 million |
| £150,000 – £199,999 | 30,000 | £100 million |
| £200,000+ | 50,000 | £280 million |
South East Leads UK Company Car Numbers
The regional breakdown shows that the South East of England has the highest number of company car drivers, with 140,000 employees receiving a company vehicle benefit.
This represents a taxable value of approximately £440 million.
Other regions with significant numbers of company car users include:
- North West England: 115,000 drivers
- West Midlands: 95,000 drivers
- East of England: 95,000 drivers
- Yorkshire and the Humber: 85,000 drivers
- East Midlands: 85,000 drivers
At the other end of the scale, Northern Ireland has the lowest number of company car drivers, with around 15,000 employees receiving the benefit, representing a taxable value of £60 million.
Scotland has more than four times as many company car drivers as Northern Ireland, with 65,000 employees paying BIK tax on company vehicles, while Wales accounts for 35,000 drivers.
| Region | Company Car Recipients | Taxable Value |
|---|---|---|
| North East | 40,000 | £130 million |
| North West | 115,000 | £380 million |
| Yorkshire & The Humber | 85,000 | £300 million |
| East Midlands | 85,000 | £300 million |
| West Midlands | 95,000 | £330 million |
| East of England | 95,000 | £330 million |
| London | 65,000 | £190 million |
| South East | 140,000 | £440 million |
| South West | 70,000 | £240 million |
| Northern Ireland | 15,000 | £60 million |
| Scotland | 65,000 | £200 million |
| Wales | 35,000 | £120 million |
Electric Vehicles Becoming the New Fleet Standard
While company car taxation continues to generate significant revenue, the structure of company fleets is changing rapidly as more businesses move towards electric vehicles (EVs).
Advances in battery technology, charging infrastructure and vehicle range mean electric cars are increasingly viewed as a practical replacement for petrol and diesel company cars.
Many modern EVs can now achieve more than 300 miles on a single charge, making them suitable for a wide range of business users. However, electric vans still present additional challenges for some operators due to payload requirements, daily mileage patterns and charging access.
Fleet priorities have also shifted. Instead of focusing solely on range anxiety, businesses are now increasingly concerned about charging availability, charging speeds and the cost of using public charging networks.
To overcome these challenges, fleets are exploring solutions including:
- Workplace charging installations
- Home charging support for employees
- Public rapid charging networks
- Smart charging technology
- Vehicle-to-everything (V2X) systems
As EV adoption continues to grow, company car schemes are expected to play a major role in helping businesses reduce emissions while providing employees with more efficient and cost-effective vehicles.
For UK businesses, the combination of favourable EV tax treatment, improved vehicle capability and expanding charging infrastructure means electric company cars are quickly becoming a standard part of modern fleet strategies.
- Predictable Costs: Fixed monthly payments simplify budgeting.
- Low Initial Outlay: No need to tie up capital in purchasing vehicles.
- VAT Benefits: VAT Reclamation
- 50% of VAT is reclaimable on the finance element for mixed use
- 100% VAT reclaimable if used exclusively for business
- VAT can also be reclaimed on maintenance packages
- Combined with salary sacrifice schemes, employees can benefit from reduced personal tax liability while businesses maintain predictable fleet costs.
The rise of electric company cars has also increased interest in salary sacrifice schemes, allowing employees to access new EVs through their employer while benefiting from significant tax advantages. Employees considering an electric company car now have a wider choice of models than ever before. Top 10 Electric Cars to Lease in 2026: The Best EVs for Private Drivers, Company Cars and Salary Sacrifice Schemes
Discover More EV Leasing & Fleet Advice
Electric vehicles are becoming an increasingly important part of modern business fleets, from company cars to commercial vans. Whether you are an employee considering an EV through salary sacrifice or a business planning its fleet transition, our expert guides can help.
Find out more: EV Salary Sacrifice Explained: How UK Employees Can Drive a New Electric Car for Less in 2026
Explore More Company Car & EV Fleet Guides
The company car market is changing rapidly, with electric vehicles, salary sacrifice schemes and fleet electrification becoming increasingly important for UK businesses and employees.
Whether you are looking to understand company car tax, explore EV salary sacrifice options or plan your organisation’s transition to a greener fleet, our expert guides can help.
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