Currently, the company car tax rates are set until the 2024–25 tax year. The new company car tax rates announced at the autumn statement will come into effect in 2025.
Company car tax rates for zero-emission vehicles and ultra-low emission vehicles, emitting less than 75g of CO2 per kilometre, will increase:
- In 2025–26 by 1 percentage point
- In 2026–27 by a further 1 percentage point
- In 2027–28 by a further 1 percentage point, up to a maximum appropriate percentage of 5 per cent for electric cars and 21 per cent for ultra-low emission cars
Rates for all other vehicle bands will be increased by 1 percentage point for the 2025–26 tax year up to a maximum appropriate percentage of 37 per cent. These rates will then be frozen for tax years 2026–27 and 2027–28.
The HMRC has details of the new company car tax rates on its website.
The new rates will only affect employees who are provided with a company car that is available for private use. The reporting requirements to HMRC will remain the same and employers will not be required to do anything differently. The existing guidance around car benefit calculations in the Employment Income Manual will continue to apply.
