Plug-in hybrid company car tax is charged as a benefit in kind: you pay income tax on a percentage of the car’s list price, and that percentage is set by the car’s official electric-only range and CO2 emissions. For 2026/27, plug-in hybrids emitting 1 to 50g/km sit in bands running from 4 percent (130+ miles of electric range) to 16 percent (under 30 miles). Whatever percentage applies gets multiplied by the car’s P11D value, and the result is added to your income and taxed at your marginal rate.
BIK Bands for 2025/26 and 2026/27
HMRC groups every plug-in hybrid emitting 1 to 50g/km of CO2 into five tiers based on certified electric range. The further your car can go on the battery alone, the lower your tax.
For 2025/26 (6 April 2025 to 5 April 2026):
- 130 miles or more: 3 percent
- 70 to 129 miles: 6 percent
- 40 to 69 miles: 9 percent
- 30 to 39 miles: 13 percent
- Less than 30 miles: 15 percent
For 2026/27 (6 April 2026 to 5 April 2027):
- 130 miles or more: 4 percent
- 70 to 129 miles: 7 percent
- 40 to 69 miles: 10 percent
- 30 to 39 miles: 14 percent
- Less than 30 miles: 16 percent
Every band rose by 1 to 2 percentage points between the two years, and the same pattern continues into 2027/28.1HM Revenue & Customs. Work Out the Appropriate Percentage for Company Car Benefits (480: Appendix 2) A fully electric car sits at 3 percent in 2025/26 and 4 percent in 2026/27, so a long-range plug-in hybrid is taxed almost identically to a pure EV. The 4 percent diesel supplement that applies to standard diesel cars does not apply to plug-in hybrids classified as alternative fuel vehicles.
How to Work Out What You’ll Pay
The calculation starts with the car’s P11D value. That is the manufacturer’s list price on the day before first registration, including VAT, delivery charges, and any factory-fitted or dealer-fitted accessories. It excludes the registration fee.2HM Revenue & Customs. How to Work Out the Benefit of a Company Car (480: Chapter 12) Multiply the P11D value by the BIK percentage for your car’s band. That gives your taxable benefit, which is added to your income and taxed at 20, 40, or 45 percent.
A worked example makes it concrete. Take a plug-in hybrid with a P11D value of £40,000 and an electric range of 90 miles, which puts it in the 7 percent band for 2026/27. The taxable benefit is £2,800. A basic-rate taxpayer at 20 percent pays £560 for the year, about £47 a month. A higher-rate taxpayer at 40 percent pays £1,120, roughly £93 a month. Now compare that with the same car in the 16 percent band (under 30 miles electric range): the higher-rate bill jumps to £2,560 a year. The difference between a long-range and short-range battery is not trivial.
What Changes From 2028/29
Rates are confirmed through 2029/30, and the trajectory matters for anyone signing a three- or four-year lease now. Bands rise by 1 percentage point in 2027/28, then the structure changes in 2028/29: every car emitting 1 to 50g/km will be taxed at a flat 18 percent regardless of electric range, rising to 19 percent in 2029/30. A plug-in hybrid with a 130-mile battery and one with a 25-mile battery will pay the same.
The range-based advantage disappears entirely. Pure electric cars stay much cheaper: their rate reaches only 7 percent in 2028/29 and 9 percent in 2029/30. If you pick a plug-in hybrid now on a multi-year cycle, expect a large chunk of that agreement to fall under the flat 18 percent rather than the 4 or 7 percent you might start on.
Salary Sacrifice
Salary sacrifice is the most tax-efficient route into a plug-in hybrid through an employer. You give up a portion of your gross salary in exchange for the car, and the sacrificed amount escapes income tax and employee National Insurance. You only pay tax on the BIK value.
The treatment depends on emissions. For cars at 75g/km CO2 or less, the taxable amount is simply the BIK value. For higher-emission cars, HMRC uses the greater of the BIK value or the salary given up, which removes most of the saving. This is why salary sacrifice works well for low-emission plug-in hybrids and poorly for petrol or diesel cars.
Suppose your employer offers a plug-in hybrid with a P11D value of £45,000 in the 4 percent band (130+ miles of electric range in 2026/27). The annual BIK is £1,800, and a 40 percent taxpayer owes £720 in tax on that, £60 a month. If the equivalent lease cost through salary sacrifice is £400 of gross salary per month, you avoid income tax at 40 percent and employee NIC at 8 percent on the full £400, which is £192 a month in relief. Net of the £60 BIK cost, you are well ahead of leasing privately from taxed income. Check whether your scheme includes insurance and maintenance, as many do.
Reimbursement for Business Miles
When you drive the car on business and pay for the fuel or electricity yourself, your employer reimburses you at HMRC’s advisory rates. Plug-in hybrids follow the petrol or diesel rate for their combustion engine when running on fuel. From 1 June 2026, petrol rates are 14 pence per mile up to 1,400cc, 17 pence for 1,401 to 2,000cc, and 26 pence over 2,000cc. Diesel rates are 15 pence up to 1,600cc, 17 pence for 1,601 to 2,000cc, and 23 pence over 2,000cc.3HM Revenue & Customs. Advisory Fuel Rates
For electric miles, HMRC now publishes a two-tier advisory electricity rate. From 1 June 2026, it is 7 pence per mile for home charging and 15 pence per mile for public charging.3HM Revenue & Customs. Advisory Fuel Rates The split reflects the fact that public chargers cost roughly double home electricity. If your actual cost per mile is higher than the advisory rate you can claim more, but you need records. Keeping a clear log of which miles were electric and which were on fuel is essential.
Free Fuel for Private Mileage
If your employer pays for fuel you use privately and you do not reimburse them in full, a separate fuel benefit charge applies on top of the car’s BIK. It is calculated by multiplying a fixed figure by the same BIK percentage that applies to the car. For 2025/26 the figure is £28,200, and for 2026/27 it rises to £29,200.4HM Revenue & Customs. Taxable Fuel Provided for Company Cars and Vans (480: Chapter 13)
Using the earlier 7 percent example: the fuel benefit for 2026/27 would be £29,200 × 7 percent = £2,044. At a 40 percent tax rate that is £818 added to your annual bill. For a plug-in hybrid doing most of its private miles on home electricity, that charge often costs more than the fuel itself. You can avoid it entirely by reimbursing your employer for all private fuel at or above the advisory rate.3HM Revenue & Customs. Advisory Fuel Rates Many drivers find it cheaper to pay for private fuel themselves and keep the benefit charge off their tax code.