Financial and Tax Insights

Budget 24: Company Vehicles, Business Rates & Business Relief

The recent Budget included a number of tax measures that will affect businesses and their owners. In our last article, we reviewed the changes in respect of business Tax, NIC and VAT, and so in this post we take a look at some of the other measures that are being introduced and how they may affect you and your business.

As always, however, you should contact us before taking any action as a result of the contents of this summary, or if you need any further help or support.

Company vehicles

The rates of tax for company cars are amended for 2025/26:

The charge for zero emission cars rises from 2% to 3%
The charge for other cars increases by 1%
The maximum benefit of 37% remains.

The government has confirmed increases to the benefit in kind rates for company cars for tax years up to and including 2029/30.

Car fuel benefit charge

The government will uprate the car fuel benefit charge by CPI from 6 April 2025.

Treatment of double cab pick-up vehicles

The government will treat double cab pick-up vehicles (DCPUs) with a payload of one tonne or more as cars for certain tax purposes.

From 1 April 2025 for Corporation Tax, and 6 April 2025 for Income Tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind and some deductions from business profits.

The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025. Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6 April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.

Company vans

The government will uprate the Van Benefit Charge and the Van Fuel Benefit Charges by CPI from 6 April 2025.

Mandating the reporting of benefits in kind via payroll software

The government confirms that the use of payroll software to report and pay tax on benefits in kind will become mandatory, in phases, from April 2026. This will apply to income tax and Class 1A NICs.

Ending contrived car ownership schemes

The government will publish draft legislation relating to loopholes in car ownership arrangements, through which an employer or a third party sells a car to an employee, often via a loan with no repayment terms and negligible interest, then buys it back after a short period.

This arrangement means those benefiting don’t pay company car tax, which other employees pay, and so this measure will seek to level the playing field.

The changes will take effect from 6 April 2026.

R&D tax relief

There were no significant changes to R&D tax relief although the government has announced it will discuss widening the scope of the advanced assurance scheme.

HMRC have significantly increased their compliance activity since 2022 in respect of R&D relief claims and HMRC statistics suggest a decline in SME claims as well as in the wholesale & retail trade, accommodation and real estate sectors.

Business rates

For 2025/26, eligible retail, hospitality and leisure (RHL) properties in England will receive 40% relief on their business rates liability. RHL properties will be eligible to receive support up to a cash cap of £110,000 per business.

For 2025/26, the small business multiplier in England will be frozen at 49.9p. The standard multiplier will be increased to 55.5p.

The government has announced an intention to reform the business rates system with new rates and rules to come into force in 2026/27.

More Budget insights

In our next article about the recent Budget, we will be taking a look at the changes in respect of Non-Doms and resident foreigners but you can find all our insights in respect of the recent Budget here:

Please get in touch for advice before you take any action in respect of the Budget or contents of this article.