Plug-in hybrid electric vehicles (PHEVs) have long been a popular choice for company car users, offering significantly lower Benefit-in-Kind (BIK) tax rates compared to petrol or diesel vehicles. For many drivers who are not yet ready to switch fully to an electric vehicle (EV), PHEVs have served as a practical and low-tax alternative.
But that is now changing.
As of January 1st, 2025, the European Union's Euro 6e-bis emissions standard has come into effect. This regulation introduces stricter and more realistic emissions testing for PHEVs. The new tests are designed to reflect real-world usage more accurately, particularly how often PHEVs are actually driven in electric mode compared to petrol.
The result is that many PHEVs which previously reported CO₂ emissions under 50 g/km may now show higher figures under the new testing cycle. This can push them into higher BIK tax bands, making them less financially attractive for company car drivers.
Currently, vehicles emitting below 50 g/km are placed into BIK bands based on their electric-only range.
UK Company Car Tax Bands
| CO₂ (g/km) | Electric range (miles) | 2024/25 (%) | 2025/26 (%) | 2026/27 (%) | 2027/28 (%) | 2028/29 (%) |
|---|---|---|---|---|---|---|
| 0 | N/A | 2 | 3 | 3 | 3 | 3 |
| 1–50 | >130 | 2 | 3 | 4 | 5 | 5 |
| 1–50 | 70–129 | 5 | 6 | 7 | 8 | 8 |
| 1–50 | 40–69 | 8 | 9 | 10 | 11 | 11 |
| 1–50 | 30–39 | 12 | 13 | 14 | 15 | 15 |
| 1–50 | <30 | 14 | 15 | 16 | 17 | 17 |
| 51–54 | - | 15 | 16 | 17 | 18 | 18 |
| 55–59 | - | 16 | 17 | 18 | 19 | 19 |
| 60–64 | - | 17 | 18 | 19 | 20 | 20 |
| 65–69 | - | 18 | 19 | 20 | 21 | 21 |
| 70–74 | - | 19 | 20 | 21 | 22 | 22 |
| 75–79 | - | 20 | 21 | 22 | 23 | 23 |
| 80–84 | - | 21 | 22 | 23 | 24 | 24 |
| 85–89 | - | 22 | 23 | 24 | 25 | 25 |
| 90–94 | - | 23 | 24 | 25 | 26 | 26 |
| 95–99 | - | 24 | 25 | 26 | 27 | 27 |
| 100–104 | - | 25 | 26 | 27 | 28 | 28 |
| 105–109 | - | 26 | 27 | 28 | 29 | 29 |
| 110–114 | - | 27 | 28 | 29 | 30 | 30 |
| 115–119 | - | 28 | 29 | 30 | 31 | 31 |
| 120–124 | - | 29 | 30 | 31 | 32 | 32 |
| 125–129 | - | 30 | 31 | 32 | 33 | 33 |
| 130–134 | - | 31 | 32 | 33 | 34 | 34 |
| 135–139 | - | 32 | 33 | 34 | 35 | 35 |
| 140–144 | - | 33 | 34 | 35 | 36 | 36 |
| 145–149 | - | 34 | 35 | 36 | 37 | 37 |
| 150–154 | - | 35 | 36 | 37 | 37 | 37 |
| 155–159 | - | 36 | 37 | 37 | 37 | 37 |
| 160+ | - | 37 | 37 | 37 | 37 | 37 |
However, if a re-tested PHEV now emits more than 50 g/km, it could face a BIK rate starting at 15 percent. This is a sharp increase from the 5 to 12 percent range that most models previously qualified for. For higher-rate taxpayers, the result could be a monthly tax increase of hundreds of pounds.
So, what is the Euro 6e-bis emissions standard?
It’s essentially an enhanced version of the existing Euro 6 standard, introduced to improve the accuracy and accountability of emissions reporting, specifically for plug-in hybrid electric vehicles (PHEVs). While Euro 6 already governs a wide range of vehicle types, Euro 6e-bis brings in tighter rules aimed at reflecting real-world PHEV performance more accurately.
This new standard applies to all newly launched PHEV models from January 1st, 2025. For existing models still in production, the regulation becomes mandatory from December 31st, 2025. That means all current PHEVs on sale will need to be re-homologated by the end of the year if they’re to remain compliant.
What’s different under Euro 6e-bis is how emissions are measured. First, the testing distance has been extended significantly, from 497 miles (800 km) to 1,367 miles (2,200 km). This longer testing cycle is intended to better reflect how these vehicles are actually driven over time, particularly in mixed driving conditions, resulting in more realistic CO₂ data.
Another major update is to the utility factor (UF), which estimates how much of the vehicle’s usage is electric versus petrol-powered. Under the new rules, the UF has been recalibrated to match real-world usage patterns more closely. Many drivers of PHEVs don’t charge them regularly or drive them primarily on electric mode, and the new testing methods aim to account for that.
The result of these changes is that many PHEVs will now show significantly higher official CO₂ emissions figures than they did under the older standards. For company car drivers, this could mean falling outside of the sub-50 g/km CO₂ bracket, which has traditionally kept BIK tax rates low.
These changes only apply to new or re-homologated vehicles. Drivers who already have a registered PHEV won't see their BIK rates change.
This change is likely to push many more company car drivers toward fully electric vehicles, which currently offer the lowest BIK rate of just 3% for the year 2025/26. For those who already have a PHEV, the BIK rate won’t change. However, looking ahead, many fleet managers will be re-evaluating their vehicle strategies to adapt to these new regulations. Acting quickly and familiarising themselves with these changes will be crucial to managing costs and making informed decisions for the future.