Benefits In Kind

Taxation of company cars

It was announced that the appropriate percentage used to calculate an individual’s company car tax for zero emission vehicles will increase for 2028-29 and 2029-30 by 2 percentage points per year. It has previously been announced that the benefit in kind for zero emission cars will rise 1% in 2025-26 from 2% to 3%, then to 4% in 2026-27 and 5% in 2027-28.  We are now being told that the rate will be 7% in 2028-29 and 9% in 2029-30. 

Other emission bands will generally see a further 1% increase in the benefit in kind rate in 2028-29 and another 1% increase in 2029-30 up to a maximum percentage of 38% in 2028-29 and 39% for 2029-30.

Some of these changes may sound like a long way off, however, if a company is buying an electric car for use by an employee today and expecting to keep it for four or five years, they will have an impact. Is net zero being pushed back we wonder?

Taxation of double cab pick-ups

The government has announced that from 1‌‌‌ April‌‌‌ 2025 for Corporation Tax, and 6‌‌‌ April‌‌‌ 2025 for income tax, double cab pick-up vehicles (DCPUs) with a payload of one tonne or more will be treated as cars for the purposes of capital allowances, benefits in kind, and some deductions from business profits. The existing capital allowances treatment will apply to those who purchase DCPUs before April‌‌‌ 2025. Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6‌‌‌ April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5‌‌‌ April‌‌‌ 2029.  The existing beneficial VAT treatment that effectively treats DCPUs as vans will remain the same.

The previous government made a very similar announcement in the spring following a Court of Appeal judgement.  However, in the run up to the general election it very quickly back tracked after pressure from the National Farmers Union and others.  So, it will be interesting to see what happens this time!

Please click here to go back to our full Autumn Budget 2024 analysis.