Chris Thorpe considers how company cars may be taxed from April 2025.
If a car is made available to an employee for their private use, an income tax charge arises.
Double-cab pick-up trucks, a common alternative to the car, have historically been treated as vans for both VAT and income tax purposes, but this has now changed.
Benefit-in-kind income tax charge
The level of income tax on the benefit-in-kind (BIK) is determined by the list price (minus up to £5,000 as a capital contribution by the employee) of the car, which is then subject to a percentage based on the car’s CO2 emissions. Whilst a 4% surcharge is added to diesel cars not meeting RDE2 standard, 37% is the maximum rate applied to the list price, but the rate can be as low as 2% in 2024/25 for cars with zero emissions.
Hybrid cars attract lower rates
