The key announcements for fleet operators were the continuation of the Fuel Duty cut, the extension of 0% VAT on home charging and the extension of company car Benefit-in-Kind rates through to 2030/31, providing employers and employees with long-term certainty when planning vehicle replacement and salary sacrifice decisions.
Company Cars & Salary Sacrifice
The Government confirmed company car Benefit-in-Kind (BiK) tax rates through to 2030/31, with a 1% increase for all vehicles, giving fleets and salary sacrifice drivers greater certainty when planning future vehicle choices. The BiK rate will increase to 10% in 2030/31 with PHEVs increasing to 19%.
Fuel Duty
The current 5p per litre fuel duty cut has been extended until 1 July 2027, delaying planned increases and providing continued support for diesel, petrol and commercial vehicle operators.
EV Charging
The 0% VAT rate on domestic electricity has been extended until July 2027, helping keep home charging costs low. The Government has also committed £100 million to reduce the cost of public EV charging infrastructure.
Business Mileage Rates
The increased Approved Mileage Allowance Payment rates for use of private vehicles for business travel of 55p per mile for the first 10,000 business miles has been made permanent. The rate above 10,000 miles will also increase from 25p to 35p from April 2027.
EV Road Tax
Plans for the new mileage-based Electric Vehicle Excise Duty (eVED) remain on track for April 2028, with new tools planned to tackle some of the complexities raised.
What This Means for Customers
Our Head of Business Development, Christopher Caddick said “Whilst the industry will view this as another missed opportunity to accelerate fleet decarbonisation, the Budget does at least provide some certainty for employers reviewing fleet, company car and salary sacrifice policies.
Whilst we hope the 1% increase in 2030/31 signals a return to a more gradual approach to company car taxation, rather than the accelerated increases that we have become accustomed to, the important thing is another year’s clarity for employees choosing their next Company or Salary Sacrifice car.
Longer term we continue to see an increase in Cash vs Car discussions, and the increase in private vehicle mileage rates will both provide relief for those who do not have the option of a company car or have not yet made the transition to EVs and bring forward the break even point for different employee populations. This will naturally concern fleet operators with the increased Grey Fleet risk.”
If you’d like to understand how the new BiK or mileage rates affect your fleet policy, salary sacrifice scheme or cash allowance strategy, please speak with your Account Manager.