As announced in the autumn statement, the appropriate percentages used to calculate the taxable benefit of company cars have been announced for periods up to April 2008:
“As announced in Autumn Statement 2022, for the tax year 2025 to 2026, the appropriate percentage for company cars which produce zero emissions and cars which produce less than 75g of Carbon Dioxide (CO2) per kilometre will increase by 1 percentage point (ppt) up to a maximum appropriate percentage of 20%.
For the tax year 2026 to 2027, the appropriate percentage for these cars will be increased by a further 1ppt up to a maximum appropriate percentage of 21%. For the tax year 2027 to 2028 the appropriate percentage will be increased again by a further 1ppt to a maximum appropriate percentage of 5% for cars which produce zero emissions and 21% for cars which produce less than 75g of CO2 per kilometre.
Rates for all other cars which produce 75g of CO2 per kilometre and above will be increased by 1ppt for the tax year 2025 to 2026 and will then be maintained at this level until 5 April 2028, up to a maximum appropriate percentage of 37%.”
Details of the statutory changes to the Income Tax (Earnings and Pensions) Act 2003 have been given, paraphrased below:
Section 139 sets out the basis for calculating the appropriate percentage for cars with CO2 emissions.
For zero emission and ultra-low emission cars, s. 139(1) will be amended to increase the appropriate percentage by 1ppt to a maximum of 20% for tax years 2025 to 2026.
An additional 1ppt will be added on top of the changes made to s. 139(1) ITEPA, to a maximum of 21%, to take effect “for tax years 2026 to 2027” (i.e. presumably for 2026-27). A further 1ppt will be added on top of these changes, to a maximum of 21%, to take effect “for tax years 2027 to 2028” (i.e. presumably for 2027-28).
For all other cars which produce 75g of CO2 per kilometre and above s. 139(3)(a) will be amended to include an additional 1ppt from the tax year 2025-26 and to continue at that level for subsequent tax years.
Section 139(3)(b) will be left as currently drafted to ensure the 37% appropriate percentage limit remains.