Benefit in Kind (BIK) rates are increasing by one per cent in each tax bracket, for every type of vehicle. The rates range from 21 per cent to 37 percent, with higher emission vehicles having higher BIK rates.
Electric vehicles currently have a low BIK rate of two per cent, but from April 2025, this will steadily increase by one per cent each year until 2028.
So if you’re currently offering company cars as a part of a salary sacrifice scheme or a company benefit, your employees will pay more tax from the new financial year.
From 2026, there’ll be changes to how you’ll need to report and pay tax with BIK. Income tax and Class 1A National Insurance contributions on most BIKs will need to be paid in real-time through PAYE
Changes for heavy goods vehicles
If your business uses heavy goods vehicles (HGVs), there are a few new regulations to be aware of:
it might become easier to get a Certificate of Professional Competence (CPC). The government wants to make training more accessible and fit for purpose
Transport for London (TFL) will require all HGVs to have a safety permit before entering most parts of Greater London. HGVs must meet the requirements of the Progressive Safe System by 4 May 2025 to drive in these parts of the capital
if your business uses HGVs for international travel, you’ll need to upgrade your tachographs to the latest version to comply with new regulations
Self-driving cars on the way?
With the Automated Vehicles Act 2024 being passed in May 2024, the groundwork has been laid for self-driving cars in the UK. The Act provides a clear legal framework, addresses liability concerns, and prioritises safety, setting the stage for wider adoption of automated vehicles in the years to come.
The potential impact for small businesses could be significant, with self-driving cars likely to impact the future of supply chains, deliveries, and logistics.
Congestion charges begin for EVs
From December 2025, any vehicle entering the Congestion Charge zone in London will need to pay the £15 fee. EVs and hydrogen fuel cell vehicles will no longer be exempt from the charges.
Many businesses have invested in electric vans or cars to avoid regularly paying the Congestion Charge and need to prepare for the extra costs.
