New HMRC car tax changes launching soon will be 'especially important' for UK drivers
Experts are calling on motorists and employers to ensure they are prepared for the changes
GETTY
Britons are being urged to prepare for new car tax changes set to launch in the coming years as it could affect thousands of motorists who drive for work.
Earlier this year, HM Revenue and Customs announced that motorists will no longer need to submit a P11D for each employee for whom they payroll expenses and benefits.
These changes will be introduced in April 2026, with employers required to ensure their payroll software is equipped to handle benefits directly in one process.
This will also include Benefit-in-Kind (BiK), which many drivers around the country benefit from through their workplace salary sacrifice schemes.
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The P11D changes will be introduced in April 2026
GETTYThe GOV.UK website states that the value of a car is reduced if they have it part-time, pay something towards its cost and if it has low CO2 emissions.
At present, the BiK rate for electric vehicles is frozen at two per cent until the 2025/26 financial year, when it will increase by one per cent per year.
Many hybrid vehicles will also pay lower BiK rates of less than 10 per cent, while petrol and diesel vehicles pay far greater costs in an attempt to help motorists switch to zero emission vehicles.
For the 2024/25 tax year, the most polluting vehicles, which emit more than 160g of CO2 per kilometre, have a fixed BiK rate of 37 per cent, although this only affects a small number of salary sacrifice vehicles on the road.
Commenting on the switch, Cheryl Clements, regional development manager at Tusker, urged employers to act soon to ensure they are not caught out by the changes.
She said: "With this change, payrolling benefits will be mandatory from April 2026. Employers will need to comply with how they do the deductions and report to HMRC.
"Those who run a salary sacrifice car scheme, along with other benefits which are on salary sacrifice, will find this especially important," Fleet News reported.
Clements highlighted that the new processes would make payrolling benefits easier for employers and remove inconsistencies and delayed payments.
There have been strong calls in recent years for the Government to confirm new car tax bands for vehicles that use the Benefit-in-Kind system past the 2027/28 financial year.
The 2022 Autumn Statement saw car tax rates confirmed until April 2028, although many are now asking for more clarity, especially if they have longer contracts.
Industry experts have also told the Government that Bik rates for zero emission vehicles should be kept low to incentivise more people to switch to electric cars.
Pure electric vehicles will see the BiK rate start to increase from next year, even though the most polluting petrol and diesel vehicles have frozen rates until 2028.
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