Benefit in Kind & Vehicle Excise Duty | Moorepay

Payroll & HR Rates

Benefit in Kind & Vehicle Excise Duty


Benefit in Kind & Vehicle Excise Duty


6 April 2023


Company car rates

  • Rates for petrol and diesel vehicles will remain the same until 2025.
  • They will then be increased by one percentage point for 2025-26 up to a maximum of 37% and will then be fixed until 2028.

Changes to taxation of electric vehicles

  • The OBR forecasts that by 2025 half of new vehicles sold will be electric, and from April 2025, these vehicles will no longer be exempt from vehicle excise duty.
  • Rates remain as they are until April 2025 when electric cars, vans and motorcycles will begin to pay VED in the same way as petrol and diesel vehicles.

Electric and ultra-low emission cars (emitting less than 75g/km)

  • These will increase by one percentage point each year between 2025 and 2028 to a maximum of 5% for electric cars and 21% for ultra-low emission cars.
  • Also, from 1 of December HMRC has increased the advisory electricity rate to 8ppm from 5ppm.
  • The rate to reimburse drivers with electric company cars will also now be reviewed quarterly in line with advisory fuel rates.

Potential fuel hike next year?

There’s also some speculation relating to a possible 23% hike in fuel duty from March next year (equivalent to 12p per litre). This comes as a result of the temporary measure put in place by the government in March this year to reduce the fuel duty by 5ppl, this was meant to last until March 2023 only however we don’t expect a decision on this to be made until the spring statement.

payroll legislation guide

Payroll Legislation Guide

Do you know the dates of all the complex payroll legislation changes? Are you aware of what you need to do to ensure your business is compliant? Many UK businesses aren’t aware…