There's a chance that Chancellor Rachel Reeves has detailed her 2024 Autumn Budget, introducing some changes.
Understanding the New Tax Changes for Vehicle Owners
It was announced by the government that there will be an increase in the tax rate for year VED rates for new cars. This is to try and widen the gap between higher-polluting vehicles. This is to focus on engaging low-emission vehicles. The chancellor has doubled the cost of vehicle excess duty, or some know it as road tax for buyers of many new model cars. in a measure the government says increases the differential between fully electric and internal-combustion vehicles.
The first-year tax rate for cars emitting 50 g/km CO2, including hybrids, will increase from the current rate of £10 for petrol and diesel vehicles (or zero for hybrids) to £110. This is a significant increase. Most plug-in hybrid vehicles fall into this category. Following this, cars emitting 51-75 g/km CO2 will see an increase from £30 (or £20 for hybrids) to £135.
All other rates will be doubling next year, so you can expect a significant increase in your road tax if the vehicle you drive emits a lot of CO2.
This will come into effect from April 2025. The standard road tax rate will only increase by the rate of inflation, but anyone buying a car after this date will face a much larger tax bill if their car emits more than 75 g/km of CO2. This makes combustion engine cars significantly more costly when it comes to road tax.
The government has stated that they may consider raising the threshold for the current expensive car supplement for electric vehicles “only at a future fiscal event.” As it stands, any type of car that costs over £40,000 when new will be subject to an additional £410 a year VED charge for five years after vehicle registration.
The Benefit-in-Kind tax rates for company cars will remain at 2% until 2026. Currently, we only have information on the rates up to 2030. For the 2026/27 tax year, the Benefit-in-Kind rate will be released soon, with the rates for 2028/29 set at 5% and for 2029/30 at 9%.
Double Cab Pickups No Longer Classified as Commercial Vehicles
From April next year, double cab pickups will be classified as cars for capital allowance, Benefit-in-Kind taxation, and deductions from business profits.
We recently saw a major U-turn on the decision regarding double cab pickups being treated as company cars. Initially, they were classified as cars for tax purposes, but that decision was changed just a week later. However, the Chancellor has now updated the vehicle definition for tax purposes once again. As it stands, any double cab pickup with a payload of one tonne or more will be classified as a car.
Currently, a double cab pickup with a payload capacity of one tonne or more is classified as a light commercial vehicle. If you drive a company-owned truck in this category, you’ll be charged a flat Benefit-in-Kind (BIK) rate of £3,960 per year.
From April 2025 for Corporation tax from 6 April 2025 for income tax it will that double cab pickups will be treated as cars for the purpose of capital allow and BIK and some deductions from business profits.
Looking at one of the most popular double cab pickups in the UK, the Ford Ranger, it has listed CO2 emissions of over 221g/km. This puts it in the 37% tax bracket, resulting in a Benefit-in-Kind (BIK) cost of approximately £5,876.93 per year for a 40% taxpayer, or about £489.74 per month.
