Company Car Tax rate changes from April 2025

It was announced in the Autumn Statement 2022 that changes to company car tax will come into force from 6th April 2025, 2026, and 2027. This will affect employers that provide an employee with a company car that is available for private use. The current company car tax rates will be in place until the 2024-2025 tax year.

According to HMRC, this is to support the government’s climate change objective to encourage the take up of zero and lower emission vehicles to reduce transport carbon dioxide emissions and improve air quality.

Company car tax rates for zero-emission vehicles and ultra-low emission vehicles that emit less than 75g of CO2 per kilometre will increase as follows:

  • 2025-26 by 1 percentage point to a maximum of 20%
  • 2026-27 by a further 1 percentage point to a maximum of 21%
  • 2027-28 by a further 1 percentage point, to a maximum of 21%

This new rate will only affect businesses and employers that provide company cars and employees that are provided with a company car that is available for private use.

The current method of reporting company car tax will remain the same. You can find more information here

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“Any advice relating to accounts or tax should be sought from your tax accountant. Sage Accounts Solutions Limited will not be held responsible for any loss or damage caused as a result of the information contained herein.”

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