Measure
The government has announced inflation-linked increases to Vehicle Excise Duty (VED) rates, the van benefit charge and the car and van fuel benefit-in-kind charges.
Car and van VED rates will rise in line with the Retail Prices Index (RPI) from 1 April 2027. The full rates have been published by HMRC in their ‘Overview of tax legislation and rates (OOTLAR)’ at Annex A.
The government will increase the van benefit in kind charge and the car and van fuel benefit in kind charges in line with the Consumer Prices Index (CPI) from April 2027. The rates applicable from 6 April 2027 will be £30,200 for the car fuel benefit multiplier, £4,310 for the van benefit and £825 for the van fuel benefit. It appears that the OOTLAR document published by HMRC on Budget Day transposes the car fuel and van benefit figures, so the figures above represent what we assume to be the correct values.
The VED increases will affect individuals and businesses responsible for paying the affected rates, including employers operating vehicle fleets.
The benefit charge increases will affect employers providing vans or private fuel and employees receiving those benefits.
The VED rates will increase from 1 April 2027, while the measures in relation to benefit –in-kind charges will take effect from 6 April 2027.
Inflation-linked increases will add to vehicle-related costs for individuals and businesses. Employers should factor the revised VED rates into fleet budgets and review the impact of higher van and fuel benefit charges on employees. Employers should also consider whether providing private fuel remains appropriate and explain the impact of the revised charges to affected employees. The practical cost will depend on the features of each arrangement, so budgets and employee communications should be updated.