Official Statistics

User engagement exercise response

Published 29 July 2021

1. User Engagement Exercise Overview

1.1 Changes to HMRC’s benefits in kind statistics

From 30 September 2020 the scope of HMRC’s taxable benefits in kind statistics was changed so as to cover company cars only. At the same time, a user engagement exercise was carried out to seek comments from users of the statistics on:

• how the removal of non-car benefits in kind would affect them
• views on other changes and possible improvements being considered for future versions of the new statistics publication

As explained in the original user engagement exercise, the decision to narrow the focus of the statistics was made because of the increased uptake of payrolling, particularly “voluntary payrolling” which was introduced in April 2016.

The term “payrolling” refers to when an employer calculates and deducts tax on employee benefits in kind through their payroll. This contrasts with the alternative when tax on benefits in kind is collected via tax code adjustments notified by HMRC to the employer, based on P11D returns submitted.

Payrolled benefits in kind are not reported on P11D returns, and the information that these employers are required to provide to HMRC in their PAYE submissions is not sufficient to reproduce the detailed breakdowns of all taxable benefits in kind that this publication previously contained.

In tax year 2018 to 2018 the “payrolling gap” – the difference in the value of all taxable benefits in kind and those reported through P11D returns – was estimated to be 12.7% and increasing year on year. Continuing to publish estimates based only on P11D returns therefore risked significantly underestimating the true value of these benefits and potentially misleading users of the statistics.

For company cars the situation is different, as there are specific new reporting requirements for these benefits when they are payrolled.

1.2 Scope and timing of the user engagement exercise

The initial user engagement exercise in 2020 aimed to develop a better understanding of how and why respondents used the statistics and sought views on further changes that could be made to improve the new restricted statistics. Changes proposed included:

• consolidating Table 4.1 and Table 4.5 into a single time series showing trends in the number of recipients, total benefit value and tax and NICs liabilities for company car benefit and company car fuel benefit
• replacing Table 4.4 with a CO2 emissions time series focussing on the number of recipients

This original deadline for this user engagement exercise was 31 December 2020.

Subsequently, in February 2021 HMRC consulted on a wider programme for reducing and consolidating published Official Statistics content. This formed part of HMRC’s response to the review by Ed Humpherson, Director General for Regulation at the UK Statistics Authority, Strengthening the quality of HMRC’s official statistics. Although the deadline for the aforementioned user engagement exercise had passed, the reduced coverage of HMRC’s taxable benefits in kind statistics were highlighted in this new consultation and users were again encouraged to share their views.

This document therefore summarises both responses to the initial user engagement exercise and those received as part of the more recent wider consultation

2. Feedback summary

HMRC received responses from a range of different users of the statistics, including both academic researchers and business representatives / trade bodies.

Some responses to the user engagement exercise highlighted the importance of HMRC’s company car statistics to the company car market and the wider automotive industry. One such response stated, for example, that:

The statistics are a key barometer for the entire leasing industry around the health of the company car and salary sacrifice markets […] Without these statistics the industry would effectively be operating with a blindfold on.

Respondents who focused on company car statistics were broadly supportive of the changes proposed for this year’s publication. In addition to the changes already proposed, respondents suggested some additional analysis that could be incorporated into the publication, including breakdowns by gender of recipient, by region and by business size.

Several respondents said that they opposed the restricted focus of publication to company car and fuel benefits. One such response suggested that:

The dropping of [benefit in kind] statistics other than the company car is disturbing given increasing evidence that they are a significant factor maintaining resource inequalities in the UK […] the tax authority must provide other ways to collect evidence on the extent of these other [benefits].

Among these respondents, there was interest in measures of the value of a wider range of benefits, analysis of who receives them (especially their income level), and revenue lost through tax reliefs on the benefits.

3. HMRC’s response

HMRC welcomes the feedback received during both the user initial engagement exercise and the following consultation.

3.1 Changes made to the 2021 statistics publication

This year’s statistics publication incorporates several of the changes proposed in the user engagement exercise. Tables 4.1 and 4.5 have been replaced by a single time series, Table 1. Table 4.4 has been replaced by a new time series, Table 2. In addition, Table 4.3 has been renumbered as Table 3: note that this new table is not a time series.

Table 2 gives only the number of recipients of company cars in each emissions band. Breakdowns by tax liability for years before April 2018 remain accessible on the National Archives pages.

While HMRC acknowledges user interest in taxable benefits in kind other than company cars, the different reporting requirements for these benefits mean that it is not possible to produce sufficiently accurate detailed breakdowns of the type previously published. However, this year’s publication includes a new table, Table 4, which records the total value of all (Class 1A) taxable benefits in kind each year since tax year 2015 to 2016. This provides one measure of the ongoing uptake of these other benefits. Note that the figures in this table are not directly comparable to total figures from the older tables Table 4.1 and Table 4.5, for reasons explained further in the statistical commentary and the table itself.

3.2 Future changes

HMRC will continue to explore ways to improve the presentation of these statistics in the future. In particular, further possible breakdowns of the company car statistics by gender and by region are currently under review. Note that this year’s commentary document includes for the first time an estimate of the gender breakdown of all recipients of company car benefit (72% male in tax year 2019 to 2020).

HMRC continues to welcome users’ views on how to further improve and redesign the taxable benefit in kind statistics in the future.

Please contact [email protected] if you have any enquires about these statistics.