What is Hybrid Car Company Car Tax?
A hybrid car is definitely worth considering as a company car with it potentially giving you tax and fuel cost savings.
Having a company car is seen as a benefit in kind by HMRC which means you will pay more tax because of it depending on the fuel type of the vehicle you choose.
For company car tax purposes the plug in hybrid option is favourable in comparison to it’s petrol and diesel counterparts because it has lower CO2 emissions.
The government rewards users of lower emission vehicles like hybrids with a lower benefit in kind (BIK) rate which results in a reduced company car tax charge.
Choosing a plug in hybrid car isn’t for everyone with decisions needing to be made about a few different factors and not just how much company car tax you will pay.
We focus on the cost to you from a tax perspective so you can factor the tax part in to your decision making process.
What are the Hybrid Company Car Tax BIK rates?
HMRC use a hybrid cars CO2 emissions and electric mileage range to work out the benefit in kind value.
The most common BIK band for hybrid cars is the 1 and 50g/km CO2 emission band which has five different BIK rates based on the distance a car can go using only electric power.
The electric mileage range is an important part of the calculation and is based on the distance a car can travel using electric power before its batteries need recharging.
The most common CO2 band for a hybrid company car is the 1 and 50g/km CO2 emission band.
1 and 50g/km CO2 emission band BIK rates:
- cover less 30 miles 14% BIK rate.
- cover 30 and 39 miles 12% BIK rate.
- cover 40 and 69 miles 8% BIK rate.
- cover 70 and 129 miles 5% BIK rate.
- over 129 miles 2% BIK rate.
For an employees tax purposes the lower your BIK rate the better with less tax being paid the lower the percentage BIK rate.
How do you work out Hybrid Company Car Tax?
To calculate the company car tax charge for a hybrid car you need to know the P11D value of your car, the benefit in kind value and the rate at which you pay tax on your income.
- P11D value is the list price of the vehicle.
- BIK rate as per the emission band based on the electric miles range.
- Income tax rate is the rate at which you pay tax on your income. The income tax rate will be at 20%, 40% or 45% and can be found in your personal tax account.
Hybrid company car tax calculation:
P11D value x BIK percentage x income tax bracket = Company car tax payable
Hybrid Company Car Tax Code
When you have benefit in kind like a hybrid company car your tax code will be adjusted to reflect the value of your benefit.
It typically means that your tax code will be lowered below the tax free personal allowance and result in you paying more income tax.
You can check your tax code in your personal tax account or the HMRC app to make sure that your tax code is showing the correct company benefit deduction.
Hybrid Company Car Fuel Benefit
If you use your hybrid company car for personal use and your company pays for the fuel you will normally be charged a fuel benefit which is in addition to the company car benefit.
To work out the fuel benefit charge for a hybrid company car you will need to know your cars BIK rate %, the fuel benefit charge multiplier figure for the tax year in question and the rate at which you pay tax.
Hybrid Company Car VED Road Tax
Hybrid cars enjoy a £10 reduction in vehicle excise duty (VED) road tax which is normally paid by the company as the registered owner of the car. The government plan to stop the hybrid car road tax reduction from April 2025.
