A change to the calculation of ‘benefit in kind’s’ for cars and fuel on the island was announced as part of the 2024/25 annual Budget in February.

A benefit in kind is a payment made in a different form to salary or wages, which may be offered in lieu of cash, for example in the form of free meals or a gym membership.

Under the new structure, benefit in kind car charges will be primarily based on carbon dioxide (CO2) emissions and the list price of the vehicle. The fuel charge only occurs where fuel is provided to an employee for private use.

The amendments, effective from April 6 2024, mark the first change to the calculation since 2009.

The updated system follows the UK's approach, but in the Isle of Man, the maximum tax rate for the cash equivalent is 22%, a contrast to the potentially higher rates of 40% or 45% in the UK.

Minister for the Treasury, Dr. Alex Allinson, said: ‘This shift towards greener motoring is strategically aligned with the goals set out in the Climate Change Plan from 2022 to 2027.

‘We have employed an inclusive approach which considers various scenarios, including older models (such as a Vauxhall Meriva) and the top three company cars in the UK (Nissan Qashqai, Vauxhall Corsa, and Kia Sportage).

‘Individuals, especially those in company car schemes, are advised to familiarise themselves with the revised framework so they can better understand the changes to their tax liabilities.’