Company van
The Van Benefit Charge applies when an employee is provided with a company van and it is used for personal journeys.
The Van Fuel Benefit Charge applies where fuel is provided by the employer to cover private use.
Company car fuel benefit
A director or employee who is provided with a Company Car and receives any free petrol or diesel from their employer for private use is taxed based on the Car Fuel Benefit Charge and the cars CO2 benefit charge percentage.
Electric vehicles
There is no fuel benefit charge in relation to electric vehicles.
Tax Year 2024/2025 charges
As announced at Autumn Budget 2024, the government is increasing the van benefit charge and the car and van fuel benefit charges using the September 2024 Consumer Prices Index (CPI).
The following new rates will come into effect from 6th April 2025:
- the van benefit charge will be £4,020 (plus £60 from £3,960)
- the van fuel benefit charge will be £769 (plus £12 from £757)
- the car fuel benefit charge multiplier will be £28,200 (plus £400 from £2,780)
The government indicates it will introduce legislation by statutory instrument in December 2024 to ensure the changes are reflected in tax codes for tax year 2025 to 2026.
Opinion
These increases will also be impacted by higher employers Class 1A liability of 15% required to be reported on the P11Db and paid over annually in July.
Ending contrived car ownership schemes April 2026
Also announced at Autumn Budget 2024, the government is to introduce legislation to close loopholes in employee car ownership schemes to prevent them from being used to circumvent company car tax benefit in kind charges. This change will take effect from 6th April 2026.
Taxation of company cars — the appropriate percentage for tax years 2028 to 2029 and 2029 to 2030
Also announced at the Autumn Budget 2024, is the setting of the company car tax rates for tax years 2028 to 2029 and 2029 to 2030.
- Appropriate percentages for zero emission and electric vehicles will increase by 2 percentage points per year in 2028 to 2029 and 2029 to 2030, rising to an appropriate percentage of 9% in tax year 2029 to 2030.
- Appropriate percentages for all cars with emissions of 1 to 50g of CO2 per kilometre, including hybrid vehicles, will rise to 18% in tax year 2028 to 2029 and 19% in tax year 2029 to 2030.
- Appropriate percentages for all other vehicle bands will increase by 1 percentage point per year in tax years 2028 to 2029 and 2029 to 2030. This will be to a maximum appropriate percentage of 38% for tax year 2028 to 2029 and 39% for tax year 2029 to 2030.
The tax information and impact note for this measure provides more information: Income Tax: Company car tax rates 2028 to 2030
PAYadvice.UK 7/11/2024