HM Treasury has made the Van Benefit and Car and Van Fuel Benefit Order 2025 (SI 2025/1254). The Order was made on 1 December 2025, laid before the House of Commons on 2 December 2025, and takes effect from 6 April 2026 for the 2026–27 tax year and later years.
From that date the Order amends the Income Tax (Earnings and Pensions) Act 2003 to update three figures used in benefits‑in‑kind calculations: section 150(1) car fuel multiplier increases to £29,200; section 155(1B)(b) van benefit increases to £4,170; and section 161(b) van fuel cash equivalent increases to £798.
These changes follow the 2024 Order, which set the 2025–26 rates at £28,200 for the car fuel multiplier, £4,020 for the van benefit and £769 for the van fuel benefit. The 2026–27 instrument updates the same provisions for the next tax year.
For company cars where private fuel is provided, the taxable value is the vehicle’s appropriate percentage-based on CO₂ emissions-applied to the fixed multiplier in section 150. HMRC confirms this methodology and notes that fully electric cars do not attract a car fuel benefit charge.
Using the new multiplier, a car with a 25% appropriate percentage would give a fuel benefit of £7,300 for 2026–27, which is then subject to Income Tax for the employee and Class 1A National Insurance for the employer under the usual rules.
For vans, a flat‑rate benefit applies where private use is more than insignificant and goes beyond ordinary commuting. From 6 April 2026 the amount rises to £4,170; zero‑emission vans continue to have a nil charge. HMRC’s manuals set out the restricted private use condition.
Where employers provide fuel for private van mileage, a separate fuel benefit applies. The cash equivalent will be £798 for 2026–27; HMRC sets out circumstances where the charge can be reduced, for example where fuel is withdrawn mid‑year or the van is shared.
The changes affect employers providing vans for private use, and employers or third parties providing fuel for private mileage in cars and vans, along with affected employees and payroll providers updating rates. HMRC framed the 2025–26 increases as part of an annual uprating cycle, and this Order continues that approach for 2026–27.
Operationally, payroll and reward teams should update internal rates, benefits calculations and employee communications in advance of 6 April 2026. Class 1A National Insurance is payable on the cash equivalents and, following the government’s timetable, P11D reporting remains for 2026–27 with mandatory payrolling of most benefits moving to April 2027.
HMRC says a Tax Information and Impact Note will be published for this instrument. Until then, the TIINs collection on GOV.UK remains the central source for impact assessments of tax policy changes.