Fleets have a window of opportunity to take advantage of low-tax plug-in hybrids, Grosvenor has said.
The contract hire, fleet management and salary sacrifice company said that the recent announcement that new hybrid car sales would continue in the UK until 2035 should not distract from a big BIK company car tax hike scheduled for PHEVs in 2028-29.
Managing director Lee Brown said: “Fleets and company car drivers should not be lulled into a false sense of security regarding plug-in hybrids.
“While the cars can now remain on sale until 2035, the government’s tax treatment becomes less favourable after three years.”
Despite the pending increase, however, Brown pointed out that PHEVs may still make sense for some company car drivers post-2028 when compared with pure petrol and diesel cars.
He said: “There may be drivers who are still not ready for a fully electric car in three years’ time, and for these drivers, despite the escalation in rates, a plug-in hybrid will continue to attract lower BIK tax than many have been accustomed to paying over the years for petrol and diesel models.
“Also, the choice of fully petrol or diesel models will have declined so significantly due to the ZEV mandate that PHEVs will be the primary alternative to a BEV until they are removed from sale.”
Brown did however say Grosvenor would advise fleet managers to begin reducing the choice of plug-in hybrids on their car policies before the start of the 2028/29 tax year in anticipation of the changes, and start moving towards a fully electric choice list wherever possible.
He said: “This is because, while plug-in hybrids play a useful role in helping fleets to decarbonise, and currently provide a better benefit-in-kind tax than traditional petrol and diesel cars, they really have a limited window before fleets should move fully to electric cars.
“Of course, they will continue to be on sale until 2035 and will provide a better benefit in kind choice than a conventional petrol or diesel car, but the real tax advantages are time-limited.”
