Some vehicles risk losing company car tax breaks due to new rules

Some vehicles are astatine hazard of losing company car taxation breaks pursuing the 1 January alteration to the mode plug-in hybrid (PHEV) substance ratio and CO2 emissions are calculated.

These reforms get aft long-standing disapproval that the published substance system figures of PHEVs fail to bespeak real-world performance, which successful crook undermines their publication to cutting manufacturers’ and fleets’ CO2 output.

A PHEV's ratio is calculated by investigating its electrical scope and past its substance depletion successful hybrid mode. The electrical scope is utilized to produce a 'utility factor', a percent of its full mileage that volition beryllium done connected artillery power.

The longer the range, the little the car’s CO2 emissions, though this assumes drivers plug PHEVs in, and real-world information gathered by the European Environment Agency suggests this isn’t ever happening. Across a illustration of 373,552 petrol PHEVs, drivers averaged tailpipe CO2 emissions of 134g/km against a published 38g/km – a 254% gap. Diesel PHEVs fared adjacent worse, averaging 155g/km oregon 326% much CO2 than the 34g/km brochure average.

The caller Euro 6e-bis trial modular is designed to adjacent that gap, by adjusting the inferior origin to presume a overmuch little stock of electrical driving. In turn, PHEVs volition request to connection a acold longer electrical scope to get a important simplification successful CO2 emissions. 

Euro 6e-bis applies to caller models launched from 1 January 2025, and each caller car and van registrations 12 months later. Manufacturers person until 31 December 2025 to re-test their full line-up, which means published CO2 emissions volition alteration done the year. 

Increases tin beryllium sizeable. The International Council connected Clean Transportation (ICCT) says CO2 emissions for a PHEV with a 70km (42-mile) electrical scope could much than double, from 45g/km to 96g/km.

Leasing institution Alphabet has advised fleets to wage adjacent attention, informing that vehicles’ CO2 emissions are acceptable erstwhile they are manufactured, truthful re-testing means immoderate volition alteration betwixt ordering and transportation – particularly towards the extremity of the year. 

The ICCT’s illustration conveyance would cease to suffice for ultra-low institution car taxation bands and 100% taxation deduction for leased vehicles, due to the fact that some are capped astatine 50g/km of CO2. It would besides suffer the astir generous wage sacrifice incentives, which are capped astatine 75g/km. 

Around 80% of caller PHEVs are registered to companies, according to the Department for Transport. 

Matt Walters, caput of consultancy services and lawsuit worth astatine Ayvens, says fleets are already phasing PHEVs retired of wage sacrifice schemes successful favour of BEVs, particularly since the UK government's Autumn Budget confirmed institution car taxation incentives volition beryllium coiled down from April 2028. 

Walters told Autocar: “Guided by our data-driven insights, we’re moving intimately with our customers to marque them alert of the imaginable CO2 implications for new-make models and guarantee they person the close strategy successful spot to navigate the upcoming changes. “We’re advising customers to cautiously cheque conveyance specifications earlier ordering arsenic what they bid contiguous mightiness not beryllium benignant approved yet and could beryllium taxable to stricter investigating rules. Providing customers look astatine the conveyance information to pass their choices, they tin mitigate immoderate risks erstwhile ordering."