A hybrid company car is taxed as a Benefit in Kind, and for plug-in hybrids the rates are far below those for petrol or diesel vehicles. For 2025/26, a plug-in hybrid emitting between 1 and 50 grams of CO2 per kilometre sits somewhere between 3% and 15% of its list price, depending on how far it can travel on electric power alone. That percentage rises by one point for 2026/27. Company car hybrid tax is then a simple multiplication: the car’s P11D value, times the BIK percentage, times your income tax rate.
What Determines the BIK Rate
Two figures decide where a hybrid lands on the scale: its CO2 emissions in grams per kilometre, and its certified electric-only range.1GOV.UK. Tax on Company Benefits – Tax on Company Cars A longer electric range pushes the car into a lower band, since the driver burns less fuel day-to-day. Both numbers come from the Worldwide Harmonised Light Vehicle Test Procedure (WLTP).2GOV.UK. Work out the appropriate percentage for company car benefits (480: Appendix 2) The CO2 figure appears on the V5C registration document; the electric range appears on the manufacturer’s certificate of conformity.
The range-based bands only apply to plug-in hybrids with CO2 emissions of 50g/km or less. Non-plug-in hybrids and mild hybrids generally emit more than that and fall into the standard percentage table alongside petrol cars, where the rate climbs steeply with each gram of CO2.
Plug-in Hybrid BIK Bands for 2025/26 and 2026/27
HMRC publishes the percentages years ahead, so you can work out the bill for a car you don’t own yet.2GOV.UK. Work out the appropriate percentage for company car benefits (480: Appendix 2) These figures cover plug-in hybrids emitting 1–50g/km.
2025/26:
- 130+ miles electric range: 3%
- 70 to 129 miles: 6%
- 40 to 69 miles: 9%
- 30 to 39 miles: 13%
- Under 30 miles: 15%
2026/27:
- 130+ miles electric range: 4%
- 70 to 129 miles: 7%
- 40 to 69 miles: 10%
- 30 to 39 miles: 14%
- Under 30 miles: 16%
To put those numbers in context, a pure electric car sits at 3% in 2025/26 and 4% in 2026/27, while a conventional petrol car emitting 120g/km sits at 30% or more. The gap between a plug-in hybrid at 6% and a petrol car at 30% is worth thousands of pounds a year to a higher-rate taxpayer.
Plug-in Hybrids Registered From January 2025
There is a rule that catches out drivers looking at newer plug-in hybrids with higher official CO2 figures. For PHEVs registered between 1 January 2025 and 5 April 2028, if the registration certificate shows CO2 of 51g/km or more but the car has an electric range of at least one mile, HMRC treats the emissions as 1g/km for BIK purposes.1GOV.UK. Tax on Company Benefits – Tax on Company Cars
That drops the car into the 1–50g/km table above. The actual electric range still decides which row within that table applies. Take a PHEV with 55g/km on paper and a 45-mile electric range: it is treated as 1g/km and taxed at the 40-to-69-mile band, which is 9% for 2025/26 or 10% for 2026/27. Without this rule the same car would sit at a materially higher rate. If you’re picking a company car and the headline CO2 figure looks off-putting, check the registration date and the electric range before ruling it out.
Working Out What You’ll Pay
The formula is: P11D value × BIK percentage × your income tax rate. The P11D value is the list price including VAT, standard accessories, and delivery. It excludes the first registration fee, which HMRC treats as an administrative charge.3HM Revenue & Customs. How to work out the benefit of a company car (480: Chapter 12)
A worked example. Your company car is a plug-in hybrid with a P11D value of £40,000 and an 80-mile electric range. For 2025/26 that puts it in the 6% band. The taxable benefit is £40,000 × 6% = £2,400. If you’re a basic-rate taxpayer at 20%, you owe £480 for the year. At the 40% higher rate, you owe £960.4GOV.UK. Income Tax rates and Personal Allowances HMRC normally collects this by adjusting your PAYE tax code, so the deduction comes out of your monthly pay rather than arriving as a separate bill.
If the car is only with you for part of the tax year, the benefit is reduced proportionally. Take delivery on 1 October and you pay roughly half the annual figure, because you had the car for about six months of the tax year.
If Your Employer Pays for Private Fuel
Where the employer covers fuel used for personal journeys, there is a separate charge on top of the car benefit.1GOV.UK. Tax on Company Benefits – Tax on Company Cars It uses a fixed multiplier — £28,200 for 2025/26 — times the car’s BIK percentage times your income tax rate. For a hybrid at 6%, a basic-rate taxpayer would owe an extra £338 a year (£28,200 × 6% × 20%). Modest at low BIK bands, but the figure grows fast for higher-emission cars.
Reimburse the employer for all private fuel and the charge disappears. Partial reimbursement doesn’t reduce it. For plug-in hybrid drivers who mostly do short personal journeys on electric power, declining employer-paid private fuel and charging at home is usually the cheaper option.
Salary Sacrifice for Hybrid Company Cars
Where a company car is offered through salary sacrifice, “optional remuneration arrangement” rules would normally require tax on the higher of the BIK value or the salary given up. Cars with CO2 emissions of 75g/km or less are excluded from those rules and are simply taxed on the standard BIK value.5GOV.UK. Optional remuneration arrangements (480: Appendix 12)
Most plug-in hybrids emit well below 75g/km, so they qualify. You pay income tax and National Insurance on the reduced salary, and the BIK charge is low enough that the net cost is often well below what buying the same car privately would cost.
Diesel Hybrids and the 4% Supplement
Diesel company cars carry a 4% BIK supplement, but it only applies to cars powered “solely” by diesel.6GOV.UK. Amendments 6 and 7 to Clause 9: Benefits in kind: diesel cars A diesel hybrid pairs a diesel engine with an electric motor, so the supplement doesn’t apply. Diesel cars meeting the Euro 6d standard are also exempt whether or not they are hybrids, though it’s worth checking the registration documents rather than assuming.