The Government has set out company car tax rates for 2030/31, giving fleet operators much-needed long-term visibility to plan corporate replacement lifecycles and the EV transition.

Announced in the official Budget ‘red book’ document, the Benefit-in-Kind (BiK) Appropriate Percentage Rates will rise by one percentage point above 2029/30 rates across all vehicle bands.

This means that the Appropriate Percentages for zero-emission vehicles will increase from 9% to 10%, while rates for cars emitting 1 to 50g/km of CO2 will increase from 19% to 20%, and all other rates will increase by 1 percentage point, subject to a maximum of 40%.

The confirmation comes after the fleet sector warned that the lack of long-term tax clarity was actively discouraging vehicle orders. Toby Poston, chief executive of the British Vehicle Rental and Leasing Association (BVRLA), had said that a lack of BiK roadmaps past 2029/30 was causing severe driver hesitancy, as typical three- to four-year agreements did not have clarity for the full contract duration. The BVRLA had urged the Chancellor to extend rates and maintain electric car BiK at 9% for 2030/31 and 2031/32.

Commenting on the Budget announcement, Poston said: “The Chancellor has listened to the fleet sector and the decision to provide greater certainty over future Benefit-in-Kind rates is a positive outcome, even if it is just one more year of clarity. We have seen just how effective this policy has been in driving EV uptake, keeping rates competitive will give businesses and drivers the confidence to continue investing.”

However, the updated company car tax roadmap doesn’t answer calls for lower BiK on second-hand EVs based on a vehicle’s real-world depreciated value.

Zenith welcomed the long-term clarity and the continuation of low rates for fully electric cars.

Richard Jones, Zenith CEO, said: “Maintaining a competitive Benefit-in-Kind tax sends an important signal that the Government remains committed to supporting the UK’s transition to electric vehicles. Consistency matters – businesses and drivers make vehicle decisions years in advance, and stable policy gives them the confidence to invest.

“Company car and salary sacrifice schemes have become one of the UK’s most effective routes into EV ownership, helping thousands of drivers make the switch. At Zenith, 79% of vehicles ordered through our company car schemes and 91% through salary sacrifice are now fully electric, demonstrating the role that clear, long-term incentives can play in changing behaviour.

“In a period of economic uncertainty, predictability is just as important as the level of taxation itself. Today’s announcement gives fleets, employers and drivers greater confidence to plan ahead and continue investing in cleaner vehicles.”

Thom Groot, CEO of The Electric Car Scheme, said the decision to maintain low Benefit-in-Kind tax rates and extend EV salary sacrifice incentives for another year was welcome news for households.

But he added: “That said, the 1% increase in the Benefit-in-Kind for the 2030/31 rate (with the rate for EVs set at 10%) starts to price out those looking at second-hand EVs and those on lower incomes.

“We would have liked to see salary sacrifice for electric cars extended by at least two years until 2032, with rates held at 9% for new electric cars, and reduced by two-thirds for second-hand EVs.”

Meanwhile, Dave Bushnell, director of consultancy and strategy at Fleet Operations, said confirmation that BiK tax for electric company cars will rise by just one percent to 10% in 2030/31 was welcome news that gives both employers and drivers some much-needed certainty.

“Knowing the rates through to 2030/31 will help the industry work out the total cost of ownership and price four- and five-year vehicle leases more accurately. It should also restore confidence in the long-term future of salary sacrifice schemes, which have a big part to play in encouraging EV take-up.”

Bushnell added: “We’re disappointed, however, that the Chancellor hasn’t taken this opportunity to make used electric company cars more affordable. Drivers are still taxed on a vehicle’s original list price, even when it has depreciated significantly. Changing this could have opened up electric cars to more employees through salary sacrifice schemes, while also helping to boost demand in the second-hand market and support residual values.

“The Government may have claimed to remain ‘unshakably committed to net zero’, but the continued rise in electric company car tax and the introduction of pay-per-mile charging from 2028 will add to costs at a time when many businesses are already under pressure.”

And Alphabet GB expressed disappointment on the Government’s move to increase BiK and the lack of longer-term certainty on BiK rates.

Caroline Sandall-Mansergh, consultancy and channel development manager, said: “The fleet and leasing industry has long-urged the Government to provide greater certainty for drivers by freezing Benefit-in-Kind rates at 9% for all fully electric vehicles through to the 2031/32 tax year.

“While the 1% increase from 2030/31 may at first appear modest, it’s unwelcome and risks creating yet another barrier for drivers who are considering switching to an EV. It comes at a time when the Government is looking to accelerate the transition to greener transport, so this incremental rise sends the wrong message to drivers and businesses alike.”