Employees
Company cars (Table C)
The basis for taxing company cars and fuel provided for private use is set out in the Table. Annual increases in the rates for use of the car had been set up to 2027/28, and a further two years have been added (to 2029/30) ‘to provide long-term certainty for taxpayers and industry’. The rates will continue to provide a strong incentive to use electric vehicles, while rates for hybrids will be increased to align more closely with the rates for internal combustion engine vehicles.
The figure used to calculate the benefit of free use of business fuel for private journeys increases with inflation from £27,800 to £28,200.
The taxable amounts for the availability of a van for more than incidental private use, and for an employee’s private use of fuel in a company van, increase in line with inflation: the van benefit will rise in 2025/26 from £3,960 to £4,020, and the fuel benefit will rise from £757 to £769.
Double cab pick-ups
Commercial vehicles are treated more favourably than cars for employees who drive them and their employers. Following a Court of Appeal judgement, the government will treat double cab pick-up vehicles with a payload of one tonne or more as cars for the purposes of employees’ taxable benefits and employers’ capital allowances.
The new treatment will apply to vehicles purchased on or after 1 April 2025 (for corporation tax) or 6 April 2025 (for income tax). The existing capital allowance rules will apply to vehicles purchased before those dates; the existing benefit in kind rules will apply to employers that have purchased, ordered or leased a vehicle of this type before those dates until the earliest of disposal, lease expiry or 5 April 2029.