Plug-in hybrid company car tax to hit 18% in 2028/29

From 6 April 2028, plug-in hybrid company cars will be taxed at a flat 18% of list price, rising to 19% in 2029/30, while fully electric cars pay 7% and 9%. Plug-in hybrids will also pick up a 1.5p-a-mile electric vehicle excise duty (eVED). If you are choosing a three or four-year lease now, the cost of a plug-in hybrid will rise sharply part-way through it.

What changes in 2028/29?

At present, a plug-in hybrid’s benefit-in-kind (BiK) rate falls the further it can drive on electricity alone. From 2028/29 that stops: every car emitting 1 to 50g/km of CO2 goes into one band at 18%, rising to 19% in 2029/30, whatever its electric range (Deloitte). Fully electric cars are 4% in 2026/27 and 5% in 2027/28, then rise to 7% and 9% over the same two years (Electric Car Scheme), matching our BMW i3 report.

Tax year	PHEV (130+ mile range)	PHEV (under 30 miles)	Pure EV
2026/27	4%	16%	4%
2027/28	5%	17%	5%
2028/29	18%	18%	7%
2029/30	19%	19%	9%

Sources: Electric Car Scheme, Deloitte and Fleet News. Rates for 2027/28 and earlier are range-banded, with the cars in between at 5% to 8% (70 to 129 miles), 8% to 11% (40 to 69 miles) and 12% to 15% (30 to 39 miles).

The 2026/27 range bands are 4% for 130 miles or more, 5% for 70 to 129 miles, 8% for 40 to 69 miles, 12% for 30 to 39 miles and 16% for under 30 miles. The people hit hardest are those with long-range plug-in hybrids, since a car at 5% in 2027/28 faces 18% a year later, a jump of 13 percentage points.

What does 18% cost in practice?

BiK is charged as a percentage of the car’s list price, taxed as income. On a car with a £40,000 list price, 18% gives a taxable benefit of £7,200 a year, against £2,800 at 7%. A basic-rate taxpayer pays 20% on that, so £1,440 against £560. A higher-rate taxpayer pays 40%, so £2,880 against £1,120. This is an EV Compared calculation using the standard income tax rates for England, and it excludes any other charges.

What about the pay-per-mile charge?

eVED starts in April 2028 at 3p a mile for fully electric cars and 1.5p a mile for plug-in hybrids (Drive Electric; CAR Magazine). On our own calculation, a plug-in hybrid driver covering 10,000 miles would pay £150 a year, against £300 for an EV driver. The lower rate reflects the fuel duty that plug-in hybrids already pay on petrol. Our guide to pay-per-mile road tax explains how it will be collected.

Is a plug-in hybrid still worth it?

Compared with an EV, the plug-in hybrid loses its tax advantage entirely from 2028/29. A plug-in hybrid will pay 11 points more BiK than an EV in 2028/29 and 10 more in 2029/30, and the 1.5p-a-mile charge is the only place it comes out cheaper. For a company car driver the sums now favour a pure EV on tax, as our company car tax guide shows, and our look at electric versus hybrid covers the wider ownership picture.

What this means for you

If you are choosing a company car on a three or four-year term now, cost the plug-in hybrid at 18% and 19% for the final years, not at today’s 4% to 16%. Compare it with an EV using our BiK calculator, and check whether a low-BiK company car EV fits your budget. If you can only charge at work or on the road, a plug-in hybrid may still suit your driving, but treat the tax as a rising cost. Rates could change again at a future Budget, so ask your fleet provider what happens to your payments if it does.