Major changes to Benefit-in-Kind (BIK) taxation in April 2025

In April 2025, the UK’s Benefit-in-Kind (BIK) tax system will undergo major changes, affecting company car drivers and businesses.

These reforms aim to encourage the adoption of low-emission vehicles while increasing tax revenues.

Key changes include the reclassification of double cab pickups, increased tax for plug-in hybrids (PHEVs), and a gradual rise in electric vehicle (EV) rates. Here’s what you need to know.

Double Cab Pickups: Higher Tax Costs Ahead

From April 2025, double cab pickups will be classified as passenger cars rather than commercial vehicles, meaning their BIK charges will be based on CO₂ emissions and list price. This shift will significantly raise costs for company car drivers. 

Key Models Affected:

Ford Ranger Wildtrak 2.0 EcoBlue

• Current BIK (2024/25): £3,960 taxable benefit.
• New BIK (2025/26, 37% CO₂ band): £14,800 taxable benefit.
• Tax for 40% taxpayer: £1,584 → £5,920 per year.

Toyota Hilux Invincible X 2.8 D-4D

• Current: £3,960 → New: £14,500 taxable benefit.
• Tax for 40% taxpayer: £1,584 → £5,800 per year.

Volkswagen Amarok Aventura 3.0 V6 TDI

Current: £3,960 → New: £16,000+ taxable benefit.
Tax for 40% taxpayer: Over £6,000 per year.

Ordering a double cab pickup before April 2025 allows you to retain its commercial vehicle classification until 2029 or the end of the lease.

PHEVs: Rising CO₂ Ratings Mean Higher Taxes

New emissions testing from 2025 will likely increase PHEVs’ CO₂ ratings, pushing them into higher tax bands.

Key Models Affected:

BMW X5 xDrive50e PHEV

• Current BIK (8% band): £4,400 → New (24% band): £13,200.
• Tax for 40% taxpayer: £1,760 → £5,280 per year.

Volvo XC60 Recharge T6 PHEV

• Current: £3,840 → New: £11,500+.
• Tax for 40% taxpayer: Over £4,600 per year.

Mercedes-Benz C300e PHEV

• Current: £3,500 → New: £10,500+.
• Tax for 40% taxpayer: Over £4,200 per year.

PHEVs with an electric range of 50+ miles may remain in lower BIK brackets, but most will face sharp increases.

EVs: Still Tax-Efficient, But Costs Will Rise

EVs currently enjoy a low 2% BIK rate, but this will rise to 9% by 2029/30. Despite this, they remain the most tax-efficient option.

Key Models Affected:

Tesla Model 3 Long Range AWD (£46,000)

• Current BIK (2%): £920 → Future (9%): £4,140.
• Tax for 40% taxpayer: £368 → £1,656 per year.

Hyundai Ioniq 5 Ultimate AWD (£44,000)

• Current: £880 → Future: £3,960.
• Tax for 40% taxpayer: £352 → £1,584 per year.

BMW i4 eDrive40 M Sport (£58,000)

• Current: £1,160 → Future: £5,220.
• Tax for 40% taxpayer: £464 → £2,088 per year.

Despite gradual increases, EVs remain cost-effective due to lower fuel and maintenance costs.

Petrol & Diesel Cars: Higher Emissions, Higher Taxes

BIK rates for petrol and diesel cars will increase by 1% per year until 2029/30, reaching a maximum of 39%.

Key Models Affected:

Audi A6 40 TFSI (152g/km CO₂)

• Current BIK (31%): £13,950 → Future (36%): £16,200.
• Tax for 40% taxpayer: £5,580 → £6,480 per year.

Range Rover Sport P400 MHEV (199g/km CO₂)

Current (37%): £40,700 → Future (39%): £42,900.
Tax for 40% taxpayer: £16,280 → £17,160 per year.

Ford Kuga 2.0 EcoBlue Diesel (140g/km CO₂)

• Current (30%): £10,500 → Future (35%+): £12,250.
• Tax for 40% taxpayer: £4,200 → £4,900 per year.

Petrol and diesel vehicles will continue to see rising costs, making alternative fuel options more attractive.

Prepare for the 2025 BIK Changes

The upcoming tax changes will make double cab pickups, PHEVs, and high-CO₂ vehicles significantly more expensive. While EVs will see a gradual rise in BIK rates, they remain the most cost-effective choice. If you’re considering an electric company car, Swansway offers a range of options to suit your business needs. Get in touch with the Swansway team to find the right vehicle for you.