As part of the Budget 2026 announcements, the government is increasing the van benefit charge and the car and van fuel benefit charges in line with the September 2026 Consumer Prices Index (CPI).
The original announcement appears to have confused amounts between the different charges. PAYadvice.UK have reviewed and amended to what is more likely to be implemented. So with those adjustments:-
budget 2026 documents
The following corrected new rates will come into effect from 6th April 2027:
- the van benefit charge will be £4,310 in tax year 2027 to 2028
- the van fuel benefit charge will be £825 in tax year 2027 to 2028
- the car fuel benefit charge multiplier will be £30,200 in tax year 2027 to 2028
The government will introduce this legislation by statutory instrument to uprate these charges ahead of the tax year 2027 to 2028.
Mandatory Payrolling
These values will be an important aspect of preparation for mandatory payrolling of company cars and vans along with associated fuel.
Company car tax also changes from April 2027
Budget 2026 has also confirmed the increases in calculating company car benefit tax which is also needed for the progression of mandatory payrolling,
For all cars, drivers must add 4% to their appropriate percentage if the car is propelled solely by diesel. This is capped at 37% until tax year 2027 to 2028.
Cars that meet the Real Driving Emissions Step 2 (RDE2) standard are exempt from the diesel supplement…..
Plug-in Hybrid Electric Vehicles (PHEVs) first registered and made available from 1st January 2025 to 5th April 2028, under any emission standard other than Euro 6d-ISC-FCM or Euro 6e, have a deemed CO2 emission of 1 g/km.
Under mandatory Payrolling you must also report car details
Please note that with mandatory payrolling of company cars, as well as taxing the benefit charge via payroll, employers also need to report the company car details. So there is Payrolling the benefit as one aspect, and then separately reporting the car (up to 15 separate cars per employee can be reported).
This annual exercise of car reporting is required on the first pay cycle of each new tax year under Payrolling and then again each time there is a change mid year with the amended details such as adjustments to the current car and reporting a new or changed car etc.
No added detail is needed for vans, just the van benefit charge and any associated fuel charge.
Opinion
This detail is important for the preparation of mandatory Payrolling and the reporting of vans and cars.
The benefit charge on EV and other lower emission vehicles continues to rise each new tax year. The EV company car benefit charge, and yes, that includes Electric Vehicle salary sacrifice cars, they are company cars for taxation purposes, is increasing by another 25% from 6th April 2027 and then another 40% from April 2028.
Also consider the significant increase in company car tax that applies from April 2028 with many low emission vehicles increasing even more dramatically dramatically.
Factor these new uprated values into your Payrolling 2027 project planning.
PAYadvice.UK 28/10/2027