March 12, 2025
Sara Davies
Electric and Hybrid News
Company car drivers are facing a hike in BiK rates on plug-in hybrids this year, as the way in which the emissions are calculated is being radically overhauled.
What’s Changed for PHEV Testing?
The emissions figure of a vehicle forms part of the equation that works out how much tax a company car driver must pay for driving their vehicle.
The emissions for a plug-in hybrid electric vehicle (PHEV) have always been calculated based on 6e emission standards tests which simulate 800km (497 miles) of driving but models launched from 1 January 2025 onwards will be subject to new tests called the Euro 6e-bis standard, which test journeys up to 2,200km (1,367 miles).
These tests give a better idea of how PHEVs perform in real life and may result in a doubling of the current emissions figures for vehicles.
Why the Change?
The new emissions tests are more accurate due to the increase in miles they are being performed across. A PHEV is generally driven in fully electric mode for the first part of a journey then more of less fully in traditional fuel (ICE) mode for the remainder, resulting in a severely skewed mileage figure when only a very limited number of miles are assessed. In reality, once the battery is drained, a plug-in hybrid is no more efficient than an ICE vehicle and this is also the reason that PHEVs are generally considered not to be a great choice for drivers who regularly commute significantly further than the all-battery range. They’re a far better option for families that can charge at home and need a car mainly for short commutes.
The International Council on Clean Transport (ICCT) said: “Over the past several years, it has become evident that the currently used UF curve does not reflect the real usage of PHEVs resulting in unrepresentatively low official CO2 emission values.”
From January 1 2025, new and existing PHEVs will be subject to the more rigorous emissions testing, to better represent these real-world use cycles; some models are expected to see big jumps in the tax bands based on their CO2 emissions.
At the end of the year this will include all cars on sale, meaning existing models will have to be retested in order to comply.
Demonstrating the Impact
To illustrate the effect the new parameters have on a PHEV’s emissions and fuel consumption in real world driving, the International Council on Clean Transport (ICCT) analysed the performance of a BMW X1 xDrive25e under the revised conditions.
The X1’s emissions figures rise from around 45g/km to 96g/km, representing a huge leap from its Benefit-in-Kind company car tax banding of 8 per cent to 24 per cent under the new 6e-bis tests, on a par with the more efficient pure petrol models.
A further advancement in emissions standards is expected in 2027, when ‘Euro 6e-bis-FCM’ comes into force. Under these circumstances, tested over a total distance of 4,260km (2,647 miles), the same BMW’s emissions would increase to 122g/km, according to the ICCT.
Only cars bought brand new will be affected. As the legislation currently stands there are no plans to backdate the bandings for existing company car users but those ordering new cars this year may see an increase in the car’s BiK tax rate if the vehicle is re-assessed between the point of order and delivery.
Most PHEV models currently attract a 5%, 8% or 12% benefit-in-kind (BiK) rate. If the CO2 emissions for a PHEV model increase beyond 50g/km, as part of the revised test, then drivers will face a BiK rate of at least 15% but it could be substantially more, as shown in the example of the BMW X1.
Bad News for PHEVs
It’s another blow for PHEVs following changes to the BiK bands in the October budget which saw Plug-in hybrids being hit by higher company car tax thresholds from 2028.
Company car drivers will face a hike in their BIK from 2028/29 of up to 13 percentage points, with zero-emission mileage being ditched as a differentiator. The appropriate percentage rates for vehicles which produce 1g to 50g CO2 per kilometre and are also capable of operating on electric power within a certain range will be amended.
Vehicles with CO2 emissions of 1g to 50g per kilometre will have appropriate percentages of 18% in 2028/29 and 19% 2029/30. For a PHEV capable of up to 69 miles zero-emission driving, that will mean a seven percentage point year-on-year increase in BIK.
By making PHEVs less attractive, an expected downturn in plug-in hybrid demand is anticipated to propel the transition to fully electric vehicles faster.
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