The announcements from the Statement
Essentially, the Statement didn’t deviate from what was announced in the Autumn Budget in relation to what impacts the provision of car benefits. Here’s a reminder of the key changes previously announced.
Car ownership schemes
We continue to await the consultation paper from HMRC to outline the draft legislation in respect of ‘contrived’ Employee Car Ownership Schemes (ECOS), such as those arrangements where there are no repayment terms and negligible interest.
We’ve engaged with HMRC as part of the collaborative approach they outlined in the announcement to ensure that legitimate ECOS, such as those provided by CBS, aren’t impacted due to the legislation changes.
For further details, read our Autumn Budget blog.
Company car tax
The Autumn Budget 2024 set out the rates through to the tax year 2029/30, including significant increases for all cars, and these were all reaffirmed in the Spring Statement.
The substantial changes in hybrid company car tax rates starting from 2028/29 offer a clear indication of the future tax increases for zero-emission company cars post 2030. With the ban on petrol and diesel vehicles, tax incentives to promote electric vehicle adoption will no longer be necessary. Consequently, we anticipate that company car tax rates for electric vehicles will align with those for hybrid vehicles.
Vehicle Excise Duty and Expensive Car Supplement
The Government is also increasing Vehicle Excise Duty (VED) first year rates for all types of cars from 1 April 2025, and cars with a list price of more than £40,000 currently pay an extra £410 VED from the second year (alongside the standard subsequent year VED) for five years, under the new Expensive Car Supplement rules.
For more information on all tax changes from this April, check out our latest blog, Tax Changes from April 2025.
Employer National Insurance Contributions
Starting from 6 April 2025, the employer National Insurance Contributions (NICs) rate goes up from 13.8% to 15%. Additionally, the threshold at which employers begin paying NICs for each employee drops from £9,100 per year to £5,000 per year.
In addition to payroll costs increasing, employer Class 1A NICs on company cars and associated benefits are also impacted including the private fuel benefit increase outlined below:
| Tax year | Fixed figure |
|---|---|
|
2025/26 |
£28,200 |
|
2024/25 |
£27,800 |
For employees in a company car who receive private fuel benefit, the flat rate used to calculate the car fuel benefit has increased. This taxable amount is calculated by taking the BiK rate of the car they drive and multiplying it by the fixed figure.
Let us support you during this challenging time
If you do need help to create business savings, we can assist your business using our employee car schemes. Our team of experts is here to help you navigate these changes, so if you have any questions or concerns, get in touch.