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Budget likely to have ended company car PHEV revival, says FleetCheck

The Autumn Budget is likely to have ended the current revival of fleet interest in plug-in hybrid (PHEV) company cars, FleetCheck has pointed out.

Peter Golding, managing director at the fleet software specialist, highlighted that anyone now paying 5% Benefit-in-Kind on a new PHEV in the current tax year would see a jump to 18% by year four in 2028/29.

Fleet interest in PHEVs has surged over the last year of so following a wave of new models  with a much-increased electric-only range that’s qualified them for the 5% BiK bracket; not much more expensive from a personal tax point of view than a full battery electric vehicle on the current 2% BiK rating.

“Quite a few drivers have seen these cars as a useful stepping stone to going fully electric, sidestepping concerns about range anxiety and the charging infrastructure, and they have made their way onto an increasing number of choice lists,” Golding added.

But he said the Budget had made it clear the Government wants to strongly discourage this line of thinking.

“While there is only a couple of percentage points difference in Benefit-in-Kind between an EV and PHEV for a driver today, that rises to a difference of 7% and 18% in four years. Not many people are going to want to pay that bill.”

Golding added that the move appeared to bring government policy more closely into line when it came to electrification.

“With the recent clarification that hybrids would be allowed to stay on sale until 2035, there was arguably a slight pull against zero emissions mandate targets. Now, it looks like their thinking is much more consistent, especially the fact there will be a high, flat rate for all PHEVs from 2028/29.

“If you are getting a company car, the Government wants it to be an EV.”

The new wave of PHEVs are now more likely to find sales in the private sector.

“Individual consumers are showing quite a high level of resistance to EVs for a variety of reasons and PHEVs provide a solution, as long as people are willing to pay the newly increased first-year vehicle excise duty,” Golding summed up.

Written by Natalie Middleton

Natalie has worked as a fleet journalist for over 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.

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