Plug-in hybrid electric cars (PHEV) will be subjected to stricter emissions tests in 2025 to better represent real-world use cycles. It’s thought the changes could have significant implications for company car drivers, with some models expected to see big jumps in tax bands, which are based on CO2 emissions.
As of current, tax rules state that cars that emit less than 50g/km of CO2 are divide into bands based on their zero-emission driving distance.
Most PHEVs are in this category and attract a 5%,8% or 12% Benefit in Kind (BIK) rate. However, if the emissions go beyond 50g/km drivers will face a BIK rate of at least 15%.
The revised emissions standard, known as Euro 6e-bis, applies to all newly launched PHEVs from 1st January 2025 and models on sale from December 31st. This means that all existing PHEV models will have to be re-homologated before the end of 2025, and company tax will be based on the figure that applies from the car’s production date.
Drivers who already have PHEV models will not be affected by the changes. However, those who have ordered new cars in 2025 may see an increase in their vehicles BIK rate if it has been re-homologated between the point of order and delivery.