This week the new government delivered its first autumn budget as it laid out plans for the economy in the next 5 years and beyond. Ogilvie Fleet takes a look at some of the changes in the budget which could impact fleets and drivers including Benefit-in-kind, National Insurance contributions, fuel duty and vehicle excise duty.

Benefit in Kind tax

New Benefit-in-Kind tax rates have been released up until 2029/30. Whilst all categories of vehicles will see an increase, the largest rise is for some plug-in hybrid vehicles which will rise to 18% in 2028. PHEVs are currently taxed at between 5 and 14%, depending on their electric range, rising one percentage point each tax year.

The new BiK tax table means that all PHEVs will be taxed at the same rate, regardless of electric range from 2028.

Full details of the new tax tables for all tax bands can be found here

The taxable rate for fully electric vehicles will now rise to 7 and 9% in 2028/29 and 2029/30 respectively. The highest emission internal combustion engines (ICE) will rise to 38 and 39% in those tax years, one percentage point above its current rate.

Whilst the BiK tax rises weren’t a surprise for most fuel types, the sharp rise in Plug in Hybrid Vehicles (PHEVs) was more than expected. Prior to the budget, the lowest BiK tax rates were found with electric vehicles with PHEV in close second. After this week’s announcement, PHEV is still the second lowest choice for BiK but much closer to the rates for petroleum and diesel (ICE) cars.

For those drivers who are unable, or prefer not to choose an EV, a plug-in hybrid remains the most economical choice when considering company car tax.

Despite the rises, drivers will now be able to order vehicles with a much better idea of their likely tax liability for the duration of the vehicle’s lease.

These figures will be updated in our driver quoting system in the coming days.

Fuel duty freeze

Chancellor Rachel Reeves announced a freeze on fuel duty as well as an extension on the current 5p per litre temporary reduction, brought in by the previous government in March 2022.

This means fleets and drivers will not see any fuel duty increase in the next financial year.

National Insurance Contributions

Employer’s National Insurance Contributions (NIC) will rise from 13.8% to 15%, alongside a reduction in the earnings threshold from £9,100 to £5,000.

This will result in an increase in the Ogilvie True Cost, as employers also pay NIC linked to the value of the vehicle.

For salary sacrifice vehicles, this could result in a reduction in monthly payments in cases where businesses pass on their NIC savings back to their drivers or greater savings for employers where they retain them in full.

Our online quoting portals will be updated shortly to reflect these changes.

Vehicle Excise Duty

The government will change the VED First Year Rates for new cars registered on or after 1 April 2025, widening the differentials between zero emission, hybrid and internal combustion engine cars.

• Zero emission cars will pay the lowest first year rate at £10 until 2029-30.
• Rates for cars emitting 1-50 g/km of CO2, including hybrid vehicles, will increase to £110 for 2025-26.
• Rates for cars emitting 51-75 g/km of CO2, including hybrid vehicles, will increase to £130 for 2025-26.
• All other rates for cars emitting 76 g/km of CO2 and above will double from their current level for 2025-26.

These changes will apply from 1 April 2025 and will uprate standard VED rates for cars, vans and motorcycles, excluding first year rates for cars, in line with the RPI each year.

Double cab pick-up tax treatment

Incoming changes in the next two tax years mean double cab pick-up trucks with a payload of one tonne or more will be treated as company cars for tax purposes, increasing the benefit-in-kind tax paid by drivers and the employer’s bottom line.

From April 2025, for corporation tax, and from April 6, 2025 for, income tax, it says that double cab pick-ups will be treated as cars for the purposes of capital allowances, BIK and some deductions from business profits.

Crucially, existing BiK arrangements will apply for double cab pick-ups purchased, leased or ordered before 6^th April 2025, with this treatment in place until disposal, lease expiry or 5^th April 2029, whichever is the soonest.

Further support for automotive

The government has also pledged £1.6billion in a bid to fix 1 million pot holes, £120million towards plug-in van grants and a further £2billion to support the automotive sector including electric vehicle manufacturing and its supply chain.

Nick Hardy, Sales and Marketing Director for Ogilvie Fleet had his say on the budget:

“This government’s first budget has been a mixed one for the fleet industry. Whilst we welcome the freeze in fuel duty for our customers, the increase in NIC could see their Ogilvie True Cost increase or a reduced quality of company car choice lists for drivers. The increase to Benefit-in-Kind was probably inevitable but we are grateful that drivers are at least now able to understand their tax liability for the duration of the vehicle’s contract.”  

You can read a full breakdown of other motoring-related changes in the British Vehicle Rental & Leasing Association statement here.

If you would like to discuss the impact of the autumn budget on your fleet and drivers, please get in touch with your account manager or use our contact form.