Latest Company Vehicle News & Advisory fuel rates - May 6th 2025

Vehicle updates for the new tax year

Three years of static company car percentages have finally given way to increases, with rates going up over each of the years 2025/26 to 2029/30. The higher costs will particularly hurt drivers of fully electric cars and hybrids.

2025/26 to 2027/28

All company car percentages have increased by 1 percentage point from 6 April 2025, subject to the overall maximum percentage of 37%.

• The percentage for fully electric cars and hybrids (CO₂ emissions of 1 to 50 g/km) that can do 130 or more fully electric miles is now 3%.
• The maximum percentage of 37% applies where CO₂ emissions are 155 g/km and over.

Diesel cars which do not meet the Real Driving Emissions 2 standard are subject to a surcharge of 4%. All new cars sold since January 2021 meet the standard. For 2026/27 and 2027/28, percentages for lower emission vehicles will generally increase by a further 1 percentage point each year.

2028/29 and 2029/30

Looking further ahead, the changes are somewhat more dramatic:

• There will be a 2 percentage point increase each year for fully electric cars, meaning a 9% percentage charge for 2029/30. For a higher-rate taxpayer provided with a fully electric company car with a list price of £60,000, the annual tax cost will go up from £720 for 2025/26 to £2,160 for 2029/30.

• The charge for hybrid company cars with CO₂ emissions of 1 to 50 g/km will no longer be based on their electric range. There will instead be a single percentage charge of 18% for 2028/29 (rising to 19% for 2029/30). On 6 April 2028, the drivers of the most efficient hybrids will therefore face an overnight increase from 5% to 18%.

And if that was not enough, the 37% maximum percentage will go up to 38% for 2028/29 and then to 39% for 2029/30. Other percentages, apart from the above, will also have 1 percentage point increases for each of these two years.

100% first-year capital allowances

The 100% allowance for fully electric cars and charging points has been extended by twelve months to 31 March 2026 (5 April 2026 for unincorporated businesses).

Double cab pick-ups

These normally have two rows of seats and four passenger doors. From 6 April 2025, a double cab pick-up with a payload of one tonne or more is classed as a car – rather than a goods vehicle – for company car purposes. However, the previous tax treatment can continue to be applied for pick-ups owned or leased before this date.

Advisory fuel rate for company cars

The table below sets out the HMRC advisory reimbursement rates for employees' private mileage using their company car from 1 March 2025. Where full reimbursement is made there is no taxable fuel benefit. The rates for the previous quarter, if different, are in brackets.

Remember, that provided all private fuel is fully reimbursed by the employee/director, the fuel benefit does not apply.

Where the employer does not pay for any fuel for the company car these are the amounts that can be reimbursed in respect of business journeys tax free.

Where there has been a change, the previous rate is shown in brackets: -

Engine Size	Petrol	Diesel		LPG
1400cc or less	12p	12p (11p)		11p
1401cc to 1600cc	15p (14p)	12p (11p)		13p
1601cc to 2000cc	15p (14p)	13p		13p
Over 2000cc	23p	17p		21p

For hybrid cars you must use the petrol or diesel rate and for fully electric cars the rate from 1st March 2025 remains at 7p (8p per mile up till 31 August 2024).

You can continue to use the previous rates for up to 1 month from the date the new rates apply.

Employees should carefully consider whether it is advantageous having private fuel provided for their company car.