Benefit-in-Kind (BIK) rates April 2025 2028

Benefit-in-Kind (BIK) Update: April 2025 to 2028

The structure of company car tax, known as Benefit-in-Kind (BIK) rates, has been established for the period from April 2024 to 2028. This reflects the UK government's ongoing commitment to electrifying the vehicle fleet and promoting environmental sustainability.

These changes are strategically designed to encourage the adoption of electric vehicles (EVs) and using cars with lower CO2 emissions, aligning with broader climate change objectives.

From April 2024 to April 2028, the BIK rates for fully electric vehicles (EVs) will begin at a low 2% for 2023-24, increasing to 3% from April 2025, and will gradually rise each year to 5% by 2027-28. This gradual increase highlights the government's goal to keep EVs appealing for company car drivers while normalizing the tax treatment of electric and internal combustion engine vehicles as the EV market develops.

Vehicles emitting between 0.1 to 50 g/km will have varying rates based on their electric ranges.

For example, fully electric vehicles will receive the same favorable rates as those with an electric range exceeding 130 miles, starting at 2% in 2023-24, moving to 3% from April 2025, and increasing to 5% by 2027-28.

Conversely, vehicles within the same CO2 range but with an electric range of less than 30 miles will encounter a starting rate of 14% in 2023-24, which rises to 16% from April 2025, reaching 17% by 2027-28. This tiered approach underscores the significance of electric range in minimizing environmental impact.

For vehicles with CO2 emissions exceeding 50 g/km, the BIK rates will commence at 15% for emissions between 51-54 g/km, progressively climbing with each emissions bracket, up to a maximum of 37% for vehicles emitting 170 g/km or more. This rate will remain constant for emissions above 160 g/km starting from 2024-25.

This revised BIK rate structure indicates the government's aim to utilize fiscal policy to support environmental initiatives. It encourages both businesses and individuals to consider the environmental consequences of their vehicle choices. The trend is evident as rates rise for vehicles with higher emissions and lower electric ranges.

However, perspectives differ, as many companies look for alternatives to full electrification. Plug-in hybrids are gaining popularity and can offer more acceptable electric ranges, providing attractive benefits regarding benefit-in-kind taxation. As rates increase significantly for higher-emission vehicles, the message is unmistakable: the future of company cars is electric, or potentially plug-in hybrid or hydrogen.