Drivers of these vehicles pay £10k to drive on UK | Tech News

Thousands of UK motorists might now be dealing with vehicle tax payments of over £10,000 a yr due to sweeping adjustments in how company vehicles are taxed. The new guidelines, launched by the Government and highlighted in just lately launched HMRC information, mark one of probably the most important overhauls in Benefit-in-Kind (BiK) tax coverage in recent times.

Chancellor Rachel Reeves‘ tax adjustments from the Autumn Budget will see some company car drivers, significantly these utilizing reclassified double-cab pick-up vans, pay up to £10,094 yearly due to a sharp rise in Benefit-in-Kind charges and vehicle reclassifications. According to HMRC, the Government collected £1.19 billion in income tax from company car customers within the 2023–2024 financial yr, together with £470 million in National Insurance contributions.

GB News reported that the quantity of staff paying BiK tax rose by 10.5% in contrast to the earlier yr, bringing the full to 840,000 company car drivers. Despite this increase in taxpayers, the full taxable worth of company car advantages fell from £3.6 billion in 2022–2023 to £3.27 billion final yr.

This decline is basically due to the growing reputation of electric vehicles, which magnetize a lot decrease BiK charges than petrol or diesel fashions.

According to the most recent figures, electric vehicles now account for 41% of all company vehicles, and this shift has additionally helped scale back the average CO₂ emissions of company vehicles to simply 56g/km.

Previously, a company driver utilizing such a vehicle may need paid round £3,960 yearly in BiK tax. Under the new guidelines, that determine can soar to as a lot as £10,094 per yr, marking a 154% increase into the 37% BiK tax band.

As of 1 April 2025, most electric vehicles, together with vehicles, bikes, and vans, have now additionally misplaced their exemption from vehicle tax.

This change ends the long-standing zero-rated tax benefit that had been in place to encourage electric vehicle adoption. Under the up to date guidelines, solely electric heavy items vehicles (HGVs) with a weight exceeding 3,500kg stay exempt.

A quantity of vehicle classes stay exempt from vehicle tax, although they have to nonetheless be registered as taxed via the DVLA.

Individuals with disabilities might declare a vehicle tax exemption for one vehicle used for his or her personal transport.

Organisations offering passenger transport companies for disabled people also can qualify for vehicle tax reduction, excluding ambulances.

Another instance is basic vehicles constructed earlier than 1 January 1985, that are additionally exempt from tax, supplied they meet historic vehicle necessities. Other exempt classes embody agricultural vehicles resembling tractors and engines used for horticulture or forestry and vehicles used for no more than 1.5km on public roads.