ACFO, the BVRLA and the SMMT are all lobbying Government for a five-year company car tax exemption for drivers of plug-in hybrid vehicles.

The Government’s re-announcement of the 25% grant towards such vehicles, up to a £5000 maximum, late last month has brought to light a confusion surrounding the benefit-in-kind taxation.

When the Government first announced the grant scheme, operating for three years from January 2011, in the 2009 Budget, it referred to “electric cars”, however, this has now switched to “plug-in cars” in official documents.

In the Pre-Budget Report 2009 at the end of last year, the Chancellor Alistair Darling also announced a company car tax holiday at a zero benefit-in-kind rate for five years for electric cars.

A DfT spokesman admitted there had been a “change in terminology” since the original announcement of the electric car subsidy and February’s re-announcement, but refused to be drawn on how these plug-in cars would be viewed for company car tax and only said: “We will be providing further information on company car tax prior to the opening of the plug-in car grant applications.”

While the spokesman would not give an exact timing for the additional information, one possibility is that the details will be revealed in the 2010 Budget, which is expected on either 17 or 24 March, where the position of plug-in rechargeable hybrid models such as Vauxhall‘s forthcoming Ampera should be clarified.

As it stands, there are three options on the table for plug-in hybrids. The first is that they are treated as other hybrids, with a 3% BIK discount. Secondly, as electric cars were before the zero-rate was announced, with a 6% BIK discount. Or thirdly, as electric cars with the full five-year zero-rate on BIK.

BusinessCar has discovered the SMMT, the body representing car makers, is aware of this grey area and is now lobbying to have the same plug-in cars that qualify for the £5000 grant included in the zero-rate company car tax band.

Fleet operator association ACFO has also raised the issue with HM Treasury officials, highlighting how confusing the situation is.

However, ACFO chairman Julie Jenner is skeptical that the Government would be so generous as to extend the zero-rate BIK tax to plug-in hybrids, which would cost it tax income. Although she did point out that it being an election year could help the case.

Meanwhile, leasing association the BVRLA is also lobbying for greater incentives for low emission vehicles.

“Government support for early adopters of electric vehicles needs to be extended to leasing companies and their thousands of customers,” a BVRLA spokesman said.

In the BVRLA’s 2010 Budget wish-list, the organisation also called for: “The Treasury to ensure that its tax incentives incorporate all zero tailpipe emission vehicles and not just electric ones.”