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 have already been set up to 2029/30 ‘to provide long-term certainty for taxpayers and industry’. The rates are intended 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 figures used to calculate the following benefits all increase for 2026/27 by 3.8% in line with inflation:
- the benefit of free use of business fuel for private journeys;
- the taxable amount for the availability of a van for more than incidental private use;
- the taxable amount for an employee’s private use of fuel in a company van.
Expenses and benefits
From 6 April 2026, employees will no longer be able to claim a tax deduction for expenses of working from home, if these are not reimbursed by their employer. Employers will still be able to reimburse such costs where they are eligible without deducting income tax or NICs.
Also from 6 April 2026, the income tax and NICs exemption for employer-provided benefits will be extended to cover reimbursements for eye tests, home working equipment, and flu vaccinations.
Enterprise Management Incentive (EMI) Scheme
Under this scheme, employees and directors can be granted options over shares in the company for which they work. No Income Tax or NICs arise if options are exercised within ten years of being granted. Other conditions apply.
For eligible companies, the following maximum limits will apply to EMI contracts granted on or after 6 April 2026:
- the total value of company options that can be unexercised at any time will be increased from £3 million to £6 million;
- gross assets will be increased from £30 million to £120 million;
- the number of employees will be increased from 250 to 500 employees.
The maximum value of unexercised options an individual employee can hold remains £250,000.
The limit on the exercise period will be increased from 10 years to 15 years. Existing contracts can be amended without losing the tax advantages the schemes offer.
Image rights payments
From 2027/28, all image rights payments related to an employment will be treated as taxable employment income and subject to income tax, employer NICs and employee NICs. This will affect sports people who set up image rights companies to accumulate payments for the rights and follows a recent case involving the former England football captain Bryan Robson, which HMRC lost.