As we approach the new tax year, it is worth remembering that the flat-rate figures used in calculating certain employer-provided vehicle benefits will increase in line with inflation from 6 April 2026.
The updated figures are as follows:
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The flat-rate van benefit charge will increase from £4,020 to £4,170.
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The flat-rate van fuel benefit charge will increase from £769 to £798.
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The multiplier used to calculate the car fuel benefit charge will increase from £28,200 to £29,200.
Where an employer provides a company car to an employee or director, this will normally be treated as a taxable benefit in kind. The amount of the benefit depends on several factors, including the vehicle’s power source, the manufacturer’s list price and its CO₂ emissions. A reduction may apply for any period during the year when the vehicle is unavailable for use.
Pool Cars
Cars that are owned by the business and used by multiple employees may qualify as pool cars. Where the conditions are met, this can mean no benefit in kind arises.
However, strict rules apply. To qualify as a pool car:
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the vehicle must be used by more than one employee
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it must not normally be kept overnight at any employee’s home
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private use must be very limited or purely incidental to business travel
If these conditions are not genuinely met in practice, the vehicle may be treated as a company car for tax purposes.
A Recent Tax Tribunal Reminder
The importance of applying the rules correctly was highlighted in a recent tax tribunal case, MWL International Ltd and Maywal Ltd v HMRC [2026].
In this case, a company had treated several vehicles as pool cars for more than 20 years and had not reported any benefit in kind. The approach had originally been discussed informally with HMRC many years earlier.
However, during a later PAYE audit, HMRC concluded that the vehicles did not actually meet the conditions required to qualify as pool cars. As a result, significant National Insurance liabilities arose.
The company challenged HMRC’s position, but the Upper Tribunal ruled that HMRC was entitled to apply the correct tax treatment, regardless of any previous informal understanding.
The case serves as a useful reminder that company vehicles must genuinely meet the pool car conditions in practice, not just in theory. Informal agreements or historic arrangements with HMRC do not provide long-term protection if the rules are not being properly followed.
If you would like to review how company vehicles are currently being treated within your business, we would be happy to help ensure everything is structured in the most tax-efficient and compliant way.