{"id":6123,"date":"2024-12-18T09:15:42","date_gmt":"2024-12-18T09:15:42","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=6123"},"modified":"2024-12-18T09:15:44","modified_gmt":"2024-12-18T09:15:44","slug":"planning-for-tax-changes-to-company-cars-during-their-lifecycle","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/planning-for-tax-changes-to-company-cars-during-their-lifecycle\/","title":{"rendered":"Planning for tax changes to company cars during their lifecycle"},"content":{"rendered":"

As businesses plan their fleet strategies, recent changes announced in the Autumn Budget are set to impact the tax costs associated with company cars.\u00a0<\/span>\u00a0<\/span><\/p>\n

<\/p>\n

With benefit-in-kind (BiK) rates now confirmed up to 2029\/30, businesses need to consider how these changes will affect their costs over a vehicle’s lifetime.<\/span>\u00a0<\/span><\/p>\n

What is changing?<\/span><\/b>\u00a0<\/span><\/h3>\n

The good news is that businesses entering into new leases or purchases can now predict employment tax charges for the next five years.<\/span>\u00a0<\/span><\/p>\n

\u00a0The bad news is that these charges will increase across the board.<\/span>\u00a0<\/span><\/p>\n

    \n
  • Zero-emission cars<\/span><\/b> \u2013 BiK rates for pure electric vehicles will rise steadily by one per cent per year from 2025\/26 to 2027\/28, reaching seven per cent in 2028\/29 and nine per cent in 2029\/30.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
      \n
    • Other cars<\/span><\/b> \u2013 For petrol and diesel cars, the rates will rise more modestly by one per cent per year, with a maximum of 38 per cent in 2028\/29 and 39 per cent in 2029\/30.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

      The hybrid conundrum<\/span><\/b>\u00a0<\/span><\/h3>\n

      For hybrids, the picture is more complex.\u00a0<\/span>\u00a0<\/span><\/p>\n

      Until 2027\/28, the BiK rate for hybrids with 1\u201350g\/km emissions depends on their electric range.\u00a0<\/span>\u00a0<\/span><\/p>\n

      Cars with a longer electric range are taxed at lower rates, with the most efficient hybrids currently at just five per cent.<\/span>\u00a0<\/span><\/p>\n

      However, from 2028\/29, all hybrids in this range will be taxed at 18 per cent (rising to 19 per cent in 2029\/30) regardless of their electric range.\u00a0<\/span>\u00a0<\/span><\/p>\n

      This could result in a tax hike for the most efficient hybrids, making them less attractive as a long-term choice.\u00a0<\/span>\u00a0<\/span><\/p>\n

      Businesses considering hybrid vehicles should weigh up the costs carefully before committing.<\/span>\u00a0<\/span><\/p>\n

      Pros and cons of electric cars<\/span><\/b>\u00a0<\/span><\/h3>\n

      Moving to pure electric vehicles has its advantages, though rising BIK rates and other changes make them less lucrative than they once were. For example:<\/span>\u00a0<\/span><\/p>\n

        \n
      • The vehicle excise duty (VED) exemption for electric cars will end in April 2025, with these vehicles being taxed at the lowest standard rate.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
          \n
        • Despite the rising BiK rates, electric cars remain competitive compared to petrol, diesel, and hybrid options.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
            \n
          • Electric vehicles benefit from salary sacrifice exemptions, meaning businesses and employees can still enjoy tax savings under optional remuneration arrangements (OpRA).<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

            The Budget also extended the temporary first-year allowances for businesses buying zero-emission vehicles and charging points to 31 March 2026 (5 April for income tax purposes).<\/span>\u00a0<\/span><\/p>\n

            Electric company cars can also boost a business\u2019s green credentials and appeal to employees, though practicality concerns, such as charging infrastructure and range limitations, remain key considerations.<\/span>\u00a0<\/span><\/p>\n

            Are vans a cost-effective alternative?<\/span><\/b>\u00a0<\/span><\/h3>\n

            Company vans offer a simpler approach to tax. Instead of a percentage-based BiK charge, vans are taxed at a flat rate (currently \u00a33,960 a year).\u00a0<\/span>\u00a0<\/span><\/p>\n

            This amount will rise in line with inflation from April 2025 but is likely to remain a lower-cost option compared to cars.<\/span>\u00a0<\/span><\/p>\n

            However, businesses must ensure the vehicle meets the criteria for a van rather than a car.<\/span>\u00a0<\/span><\/p>\n

            From April 2025, double-cab pickups with a payload of one tonne or more will be taxed as cars for BiK purposes.\u00a0<\/span>\u00a0<\/span><\/p>\n

            Transitional rules mean that pickups leased or purchased before April 2025 can still be treated as vans until 2029, but businesses need to act quickly to take advantage of this.<\/span>\u00a0<\/span><\/p>\n

            Need help managing these changes? Contact us today for advice on managing your fleet\u2019s tax efficiency and choosing the right vehicles for your business.<\/span><\/b>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

            As businesses plan their fleet strategies, recent changes announced in the Autumn Budget are set to impact the tax costs associated with company cars.\u00a0\u00a0<\/p>\n","protected":false},"author":2,"featured_media":6126,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,125],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/6123"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=6123"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/6123\/revisions"}],"predecessor-version":[{"id":6124,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/6123\/revisions\/6124"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/6126"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=6123"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=6123"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=6123"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}