Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of the benefit-in-kind tax treatment of used company vehicles on employees on lower incomes; and whether she has assessed whether calculating benefit-in-kind liabilities using the original P11D list price represents an effective approach to employment taxation.

The Government is committed to supporting motorists to transition to electric vehicles. This is why at Autumn Budget 2024, the Government announced new Company Car Tax rates for the years 2028-29 and 2029-30, which maintain generous incentives to support EV take-up. The Tax Information and Impact Note (TIIN) published alongside Budget set out the expected economic, equalities and other impacts, and highlighted that overall, the measure was expected to encourage the take-up of zero emission vehicles.

In addition, at Budget 2025, the Government announced a significant expansion of incentives to drive EV uptake, including extending the Electric Car Grant and lifting the Vehicle Excise Duty Expensive Car Supplement threshold for EVs, which will support the whole EV market.

The Government needs to balance these incentives against responsible management of public finances to ensure we have sufficient revenue to fund essential public services. A company car is a valuable benefit and therefore needs to be taxed appropriately. The Government considers P11D list prices the fairest and most practical way to calculate benefit-in-kind liabilities for company cars and has no plans to move away from this approach. However, the Government will keep the second-hand EV market under review and continue to monitor developments closely.