Hybrids dodge higher BiK tax charge for diesels

Diesel hybrids will escape the 3 per cent benefit-in-kind supplement usually applied to diesel cars.

An announcement by HM Revenue and Customs (HMRC) that diesel hybrids cannot be subjected to the usual additional tax, is great news for businesses seeking to run fuel and cost efficient cars and for car makers such as Peugeot, Citroen and Volvo which all have plans to launch diesel hybrids in the near future.

Peugeot already has its 3008 HYbrid4 diesel hybrid which launched earlier this year and the news should prove a boost for the car maker’s fleet sales. As part of the PSA Peugeot Citroen group, the Citroen brand is set to use the same HYbrid4 diesel hybrid technology in its forthcoming DS5; to launch in the spring next year. 

A spokesperson for HMRC told BusinessCar: “The 3 per cent supplement cannot apply to a diesel hybrid because s141(3) of ITEPA 2003 [the regulation document] defines ‘diesel car’ as being ‘propelled solely by diesel’.”

For Citroen this means that the 99g/km CO2 DS5 is subjected to do BiK tax of just 10 per cent rather than the 13 per cent for a fully diesel equivalent.

Volvo too, has a diesel hybrid due to launch later in 2012, the car maker confirms that its is working on a plug-in hybrid version of its V60 saloon model which will use a diesel engine.

Andy Wady, Citroën UK’s Fleet Director, said: ”This is fantastic news as we gear up for the launch of DS5 early next year.  It’s also great news for many company car drivers already attracted to DS5 and the Hybrid4 powertrain with its impressive fuel economy, low CO₂ emissions, free VED, no London Congestion Charge…and now a BIK taxation rate at just 10 per cent.”

Diesel are usually taxed at a higher rate than petrol engines to reflect that though they often are more fuel efficient, they emit higher levels of NOx and particulates.

Author: Faye Sunderland, November 17th, 2011
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